As filed with the Securities and Exchange Commission on June 10, 1997
Registration No. 333-26405
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
First Union Student Loan Trust 1997-1
(Name of trust issuing Asset Backed Notes)
of which First Union National Bank is Depositor
(Exact name of registrant as specified in its governing instruments)
United States
(Jurisdiction of Organization)
22-1147033
(I.R.S. Employer Identification No.)
--------------------------
FIRST UNION STUDENT LOAN TRUST 1997-1
c/o
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
(312) 407-4110
(Address of principal executive offices)
--------------------------
The First National Bank of Chicago,
as Eligible Lender Trustee of First Union Student Loan Trust 1997-1
One First National Plaza, Suite 0126
Chicago, Illinois 60670
(312) 407-4110
ATTENTION: CORPORATE TRUST ADMINISTRATION
(Name and address of agent for service)
--------------------------
The Commission is requested to send copies of all communications to:
<TABLE>
<CAPTION>
<S> <C> <C>
KARSTEN P. GIESECKE, ESQ. MARION A. COWELL, JR., ESQ. R. MICHAEL DURRER, ESQ.
Cadwalader, Wickersham & Taft First Union Corporation Kilpatrick Stockton LLP
201 South College Street 301 South College Street 301 South College Street
Charlotte, North Carolina 28244 Charlotte, North Carolina 28288-0013 Charlotte, North Carolina 28202-6001
(704) 348-5100 (704) 374-6161 (704) 338-5083
</TABLE>
--------------------------
Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after the effective date of this Registration
Statement. If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
--------------------------
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered Offering Price Per Aggregate Offering Registration Fee(2)
Unit Price(1)
====================================================================================================================================
<S> <C> <C> <C> <C>
First Union Student Loan Trust 1997-1 $1,000,000 100% $1,000,000 $303.03
Asset Backed
Securities...........................
</TABLE>
(1) Estimated for the purpose of calculating the registration fee.
(2) Paid by the Registrant on May 2, 1997.
--------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution.
Set forth below is an estimate of the amount of fees and expenses (other
than underwriting discounts and commissions to be incurred with the issuance and
distribution of the shares.)
SEC Filing Fee............................................... $303.03
Indenture Trustee's Fees..................................... *
Eligible Lender Trustee's Fees............................... *
Legal Fees and Expenses...................................... *
Accounting Fees and Expenses................................. *
Blue Sky and Legal Investment Fees and Expenses.............. *
Printing Fees and Expenses................................... *
Rating Agency Fees and Expenses.............................. *
Miscellaneous................................................ *
Total................................................... $ *
- --------------
* Not determinable at this time.
Item 15. Indemnification Of Directors And Officers.
The Sale Agreement and the Master Servicing Agreement will provide that no
director, officer, employee or agent of the Depositor is liable to the Trust or
the Securityholders, except for any liability which would otherwise be imposed
by reason of willful misfeasance, bad faith or negligence in the performance of
their respective duties under such Sale Agreement and Master Servicing
Agreement, or by reason of reckless disregard of such duties. The Sale Agreement
and the Master Servicing Agreement will further provide that with the exceptions
stated above, a director, officer, employee or agent of the Depositor is
entitled to be indemnified and held harmless by the Trust against any loss,
liability or expense incurred in connection with legal action relating to such
Sale Agreement and Master Servicing Agreements and related Securities, other
than any loss, liability or expense: (i) specifically required to be borne
thereby pursuant to the terms of such Sale Agreement and Master Servicing
Agreements, or otherwise incidental to the performance of obligations and duties
thereunder; and (ii) incurred in connection with any violation of any state or
federal securities law.
First Union Corporation maintains liability insurance for the benefit of
its subsidiaries, which provides coverage of up to $80,000,000, subject to
certain deductible amounts. In general, the policy insures (i) the Depositor's
directors and, in certain cases, its officers against any loss by reason of any
of their wrongful acts, and/or (ii) the Depositor against loss arising from
claims against the directors and officers by reason of their wrongful acts, all
subject to the terms and conditions contained in the policy.
Under agreements which may be entered into by the Depositor, certain
controlling persons, directors and officers of the Depositor may be entitled to
indemnification by underwriters and agents who participate in the distribution
of Securities covered by the Registration Statement against certain liabilities,
including liabilities under the Securities Act.
Item 16. Exhibits.
Exhibits
1.1 Form of Underwriting Agreement
4.1 Form of Indenture (including forms of Notes)
4.2 Form of Trust Agreement (including form of Certificates)
4.3 Form of Master Servicing Agreement
4.4 Form of Sale Agreement
4.5 Form of Administration Agreement
4.6 Form of Guarantee Agreements
5.1 Opinion of Counsel to the Issuer as to legality
8.1 Opinion of Special Federal Income Tax Counsel to the Issuer as to certain
federal income tax matters
23.1 Consents of Counsel and Special Federal Income Tax Counsel to Issuer
(included in exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on page II-4 of this Registration Statement)*
25.1 Statement of Eligibility and Qualification on Form T-1 of Bankers Trust
Company, as Indenture Trustee, under the Indenture relating to the Notes
- -----------------------
* Previously filed.
** To be filed by amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the provisions contained in foregoing provisions or
otherwise, the Depositor has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the reimbursement
by the Depositor of expenses incurred or paid by a director, officer or
controlling person of the Depositor in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Depositor will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Charlotte, State of North Carolina on
June 10, 1997.
FIRST UNION NATIONAL BANK
as depositor for First Union Student
Loan Trust 1997-1
By: /s/Robert A. Dressel
---------------------------
Name: Robert A. Dressel
Title: Vice President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Anthony P. Terracciano* Chairman of the Board, Director and Chief June 10, 1997
- -------------------------------- Executive Officer (Principal Executive
Officer)
/s/Anthony R. Burriesci* Director and Chief Financial Officer June 10, 1997
- -------------------------------- (Principal Financial Officer)
/s/James H. Hatch* Chief Accounting Officer (Principal June 10, 1997
- -------------------------------- Accounting Officer)
/s/Michael A. Gallagher* Director June 10, 1997
- --------------------------------
/s/George R. Halvorsen* Director June 10, 1997
- --------------------------------
/s/Michael L. LaRusso* Director June 10, 1997
- --------------------------------
/s/ Donald C. Parcells* Director June 10, 1997
- --------------------------------
*By: /s/James F. Powers
- --------------------------------
James F. Powers
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement
4.1 Form of Indenture (including forms of Notes)
4.2 Form of Trust Agreement (including form of Certificates)
4.3 Form of Master Servicing Agreement
4.4 Form of Sale Agreement
4.5 Form of Administration Agreement
4.6 Form of Guarantee Agreements
5.1 Opinion of Counsel to the Issuer as to legality
8.1 Opinion of Special Federal Income Tax Counsel to the Issuer as to certain
federal income tax matters
23.1 Consents of Counsel and Special Federal Income Tax Counsel to Issuer
(included in exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on page II-4 of this Registration Statement)*
25.1 Statement of Eligibility and Qualification on Form T-1 of Bankers Trust
Company, as Indenture Trustee, under the Indenture relating to the Notes
- -----------------------
* Previously filed.
$--------------
(Approximate)
FIRST UNION STUDENT LOAN TRUST 1997-1
$----------- Floating Rate Class A-1 Asset Backed Notes
$----------- Floating Rate Class A-2 Asset Backed Notes
$---------- Floating Rate Asset Backed Certificates
FIRST UNION NATIONAL BANK
(SELLER)
UNDERWRITING AGREEMENT
June --, 1997
FIRST UNION CAPITAL MARKETS CORP.
One First Union Center DC-8
301 South College Street
Charlotte, North Carolina 28288
- -----------------------------------------
- -----------------------------------------
- -----------------------------------------
Ladies and Gentlemen:
First Union National Bank, a national banking association having its
principal place of business in Avondale, Pennsylvania (the "Seller"), proposes
to cause First Union Student Loan Trust 1997-1 (the "Trust") to issue and sell
$------------- principal amount of its Floating Rate Class A-1 Asset Backed
Notes (the "Class A-1 Notes"), $------------- principal amount of its Floating
Rate Class A-2 Asset Backed Notes (the "Class A-2 Notes," and together with the
Class A-1 Notes, the "Notes") and $----------- principal amount of its Floating
Rate Asset Backed Certificates (the "Certificates," and, together with the
Notes, the "Securities") to First Union Capital Markets Corp. and
- ------------------------- (each, "Underwriter" and collectively, the
"Underwriters"), severally, in the amounts set forth opposite their names on
Schedule A, except that the amount purchased by each Underwriter may change in
accordance with Section 10 of this Agreement. The Trust is a special purpose
entity established under the laws of the State of Delaware as a Delaware
Business Trust under the Trust Agreement dated as of [June 1], 1997 between the
Seller and The First National Bank of Chicago, a national banking association
(the "Eligible Lender Trustee") (as amended and supplemented from time to time,
the "Trust Agreement"). The assets of the Trust will include, among other
things, a pool of student loans (the "Financed Student Loans") having an
aggregate principal balance as of [June 1], 1997 (the "Cutoff Date") of
approximately $----------- and certain monies due thereunder on and after the
Cutoff Date. On the date of issuance of the Securities, such Financed Student
Loans will be sold to the Eligible Lender Trustee (as defined below) on behalf
of the Trust by the Seller pursuant to the Sale Agreement to be dated as of
[June 1], 1997 (as amended and supplemented from time to time, the "Sale
Agreement") among the Seller, the Trust and the Eligible Lender Trustee. The
Financed Student Loans will be master serviced by First Union National Bank, a
separate national banking association having its principal place of business in
Charlotte, North Carolina ("First Union"), acting in its capacity of master
servicer (the "Master Servicer") pursuant to the Master Servicing Agreement to
be dated as of [June 1], 1997 (as amended and supplemented from time to time,
the "Master Servicing Agreement") among the Trust, the Master Servicer, the
Administrator and the Eligible Lender Trustee. The Notes will be issued pursuant
to the Indenture to be dated as of [June 1], 1997 (as amended and supplemented
from time to time, the "Indenture"), between the Trust and Bankers Trust
Company, a New York banking corporation (the "Indenture Trustee"). The
Certificates will be issued pursuant to the Trust Agreement. First Union, in its
capacity as administrator (the "Administrator") will perform a certain
administrative duties on behalf of the Trust pursuant to the Administration
Agreement to be dated as of [June 1], 1997 (as amended and supplemented from
time to time, the "Administration Agreement"). Forms of the Trust Agreement, the
Sale Agreement, the Indenture, the Master Servicing Agreement and the
Administration Agreement have been filed as exhibits to the Registration
Statement (hereinafter defined).
The Securities are more fully described in a registration statement which
the Seller has furnished to the Underwriters. Capitalized terms used but not
defined herein shall have the meanings given to them in the Registration
Statement.
Section 1. Representations and Warranties of the Seller
The Seller represents and warrants to, and agrees with the Underwriters
that:
(a) A Registration Statement (No. 333-26405), including a form of
prospectus, on Form S-3 relating to the Securities has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has been
declared effective under the Securities Act of 1933, as amended (the "Securities
Act"), and is not proposed to be amended or (ii) is proposed to be amended by
amendment or post-effective amendment. If the Seller does not propose to amend
such Registration Statement and if any post-effective amendment to such
registration statement has been filed with the Commission prior to the execution
and delivery of this Agreement, the most recent such amendment has been declared
effective by the Commission. For purposes of this Agreement, "Effective Time"
means (x) if the Seller has advised the Underwriters that it does not propose to
amend such Registration Statement, the date and time as of which such
Registration Statement, or the most recent post-effective amendment thereto (if
any) filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission, or (y) if the Seller has advised the Underwriters
that it proposes to file an amendment or post-effective amendment to such
Registration Statement, the date and time as of which such Registration
Statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such Registration Statement, as amended at the Effective
Time, including all information (if any) deemed to be a part of such
Registration Statement as of the Effective Time pursuant to Rule 430A(b) under
the Securities Act, and including the exhibits thereto and any material
incorporated by reference therein, is hereinafter referred to as the
"Registration Statement". "Preliminary Prospectus" means each prospectus
included in such Registration Statement, or amendments thereof, which, as
completed, is proposed to be used in connection with the sale of the Securities
and any prospectus filed with the Commission by the Seller with the consent of
the Underwriters pursuant to Rule 424(a) under the Securities Act. The form of
final prospectus relating to the Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) under the Securities Act or, if
no such filing is required, as included in the Registration Statement at the
Effective Date, is hereinafter referred to as the "Prospectus."
(b) If the Effective Time is prior to the execution and delivery of this
Agreement: (i) on the Effective Date, the Registration Statement conformed in
all material respects to the requirements of the Securities Act, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission thereunder (the "Rules and Regulations") and did
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, (ii) on the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Securities Act, the
Trust Indenture Act and the Rules and Regulations, and (iii) on the Effective
Date, the Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the Closing Date,
the Prospectus will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If the
Effective Time is subsequent to the execution and delivery of this Agreement:
(x) on the Effective Date, the Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Securities Act, the
Trust Indenture Act and the Rules and Regulations, (y) on the Effective Date,
the Registration Statement will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading and (z) on the
Effective Date, at the time of filing of the Prospectus pursuant to Rule 424(b)
and at the Closing Date, the Prospectus will not include any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The two preceding
sentences do not apply to statements in or omissions from the Registration
Statement or Prospectus based upon written information furnished to the Seller
by any Underwriter specifically for use therein.
(c) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of the
Seller, otherwise than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
(e) The Seller has been duly organized and is validly existing as a
national banking association in good standing under the laws of the United
States of America, is duly qualified to do business and is in good standing in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification, and has all power and authority
necessary to own or hold its properties, to conduct the business in which it is
engaged and to enter into and perform its obligations under this Agreement, the
Sale Agreement and the Trust Agreement, and to cause the Securities to be
issued.
(f) There are no actions, proceedings or investigations pending before or,
to the knowledge of the Seller, threatened by any court, administrative agency
or other tribunal to which the Seller is a party or of which any of its
properties is the subject (a) which if determined adversely to the Seller would
have a material adverse effect on the business or financial condition of the
Seller, (b) asserting the invalidity of this Agreement, the Sale Agreement, the
Trust Agreement, the Indenture, the Notes or the Certificates, (c) seeking to
prevent the issuance of the Notes or the Certificates or the consummation by the
Seller of any of the transactions contemplated by the Trust Agreement, the
Indenture, the Sale Agreement or this Agreement, as the case may be, or (d)
which might materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, the Trust Agreement,
the Indenture, the Sale Agreement, this Agreement, the Notes or the
Certificates.
(g) This Agreement has been, and the Trust Agreement and the Sale Agreement
when executed and delivered as contemplated hereby and thereby will have been,
duly authorized, executed and delivered by the Seller, and this Agreement
constitutes, and the Trust Agreement and the Sale Agreement when executed and
delivered as contemplated herein, will constitute, legal, valid and binding
instruments enforceable against the Seller in accordance with their respective
terms, subject as to enforceability to (x) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, (y) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law), and (z) with
respect to rights of indemnity under this Agreement, the Sale Agreement and the
Trust Agreement, limitations of public policy under applicable securities laws.
The Seller has full corporate power and authority to cause the Trust to
authorize, issue and sell the Notes and the Certificates, all as contemplated by
this Agreement.
(h) The execution, delivery and performance of this Agreement, the Trust
Agreement, and the Sale Agreement by the Seller and the consummation of the
transactions contemplated hereby and thereby, and the issuance and delivery of
the Notes and the Certificates, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Seller is a party, by which the Seller is
bound or to which any of the property or assets of the Seller or any of its
subsidiaries is subject, nor will such actions result in any violation of the
provisions of the articles of association or bylaws of the Seller or any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Seller or any of its properties or assets.
(i) KPMG Peat Marwick LLP are independent public accountants with respect
to the Seller as required by the Securities Act and the Rules and Regulations.
(j) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Securities and the sale of the
Securities to the Underwriters, or the consummation by the Seller of the other
transactions contemplated by this Agreement, the Indenture, the Trust Agreement
and the Sale Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Securities
by the Underwriters or as have been obtained.
(k) The Seller possesses all material licenses, certificates, authorities
or permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now conducted by it and as
described in the Prospectus, and the Seller has not received notice of any
proceedings relating to the revocation or modification of any such license,
certificate, authority or permit which if decided adversely to the Seller would,
singly or in the aggregate, materially and adversely affect the conduct of its
business, operations or financial condition.
(l) At the time of execution and delivery of the Sale Agreement, the Seller
will: (i) have good title to the interest in the Financed Student Loans, free
and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or
other security interest (collectively, "Liens"); (ii) not have assigned to any
person (other than the Eligible Lender Trustee) any of its right, title or
interest in the Financed Student Loans; and (iii) have the power and authority
to sell its interest in the Financed Student Loans to the Eligible Lender
Trustee and to cause the Trust to sell the Securities to the Underwriters. Upon
execution and delivery of the Sale Agreement by the Eligible Lender Trustee, the
Eligible Lender Trustee will have acquired beneficial ownership of all of the
Seller's right, title and interest in and to the Financed Student Loans. Upon
delivery to the Underwriters of the Securities, the Underwriters will have good
title to the Securities free of any Liens.
(m) The Trust's assignment of the Financed Student Loans to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee, for the
benefit of the Noteholders, a first priority perfected security interest
therein, subject to no prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance.
(n) As of the Cutoff Date, the Financed Student Loans will meet the
eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
(o) At the Closing Date, the Sale Agreement, the Master Servicing
Agreement, the Administration Agreement, the Indenture and the Trust Agreement
will conform in all material respects to the descriptions thereof contained in
the Prospectus.
(p) At the Closing Date, each class of Notes shall have been rated in the
highest investment rating category and the Certificates shall have been rated in
one of the three highest rating categories by at least two nationally recognized
rating agencies.
(q) Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Sale Agreement, the
Trust Agreement, the Indenture, the Notes and the Certificates have been paid or
will be paid at or prior to the Closing Date.
(r) At the Closing Date, each of the representations and warranties of the
Seller set forth in the Sale Agreement and the Trust Agreement will be true and
correct in all material respects.
Any certificate signed by an officer of the Seller and delivered to the
Underwriters or counsel for the Underwriters in connection with an offering of
the Securities shall be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 1 are made.
Section 2. Purchase and Sale
The commitment of the Underwriters to purchase the Securities pursuant to
this Agreement shall be deemed to have been made on the basis of the
representations, warranties and agreements herein contained and shall be subject
to the satisfaction of the terms and conditions set forth herein. The Seller
agrees to instruct the Eligible Lender Trustee to issue and agrees to sell to
the Underwriters, and the Underwriters severally agree to purchase from the
Seller (except as provided in Sections 10 and 11 hereof) the Securities at the
purchase price set forth in Schedule A.
Section 3. Delivery and Payment
Delivery of and payment for the Securities to be purchased by the
Underwriters shall be made at the offices of Cadwalader, Wickersham & Taft, 201
South College Street, Suite 1510, Charlotte, North Carolina 28244, or at such
other place as shall be agreed upon by the Underwriters and the Seller at 10:00
a.m. Charlotte, North Carolina, time on [June ---], 1997, or at such other time
or date as shall be agreed upon in writing by the Underwriters and the Seller
(such date being referred to as the "Closing Date"). Payment shall be made to
the Seller by wire transfer of same day funds payable to the account of the
Seller. Delivery of the Securities shall be made to the Underwriters for the
account of the Underwriters against payment of the purchase price thereof. The
Securities shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two business days prior to the
Closing Date. The Securities will be made available for examination by the
Underwriters no later than 2:00 p.m. Charlotte, North Carolina time on the first
business day prior to the Closing Date.
Section 4. Offering by the Underwriters
It is understood that, after the Registration Statement becomes effective
and subject to the terms and conditions hereof, the Underwriters propose to
offer the Securities for sale to the public (which may include selected dealers)
as set forth in the Prospectus.
Section 5. Covenants of the Seller
The Seller agrees as follows:
(a) To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following the
execution and delivery of this Agreement; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus prior to the
Closing Date except as permitted herein; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any amended
Prospectus has been filed and to furnish the Underwriters with copies thereof;
to promptly advise the Underwriters of its receipt of notice of the issuance by
the Commission of any stop order or of: (i) any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus; (ii) the suspension of
the qualification of the Securities for the offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; (iv) any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information. In
the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, the Seller promptly shall use its best efforts to obtain
the withdrawal of such order by the Commission.
(b) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, including all consents and exhibits filed therewith.
(c) To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus; and (iii)
any document incorporated by reference in the Prospectus (including exhibits
thereto). If the delivery of a prospectus is required at any time prior to the
expiration of nine months after the Effective Time in connection with the
offering or sale of the Securities, and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus in order to comply with the
Securities Act, the Seller shall notify the Underwriters and, upon the
Underwriters' request, shall file such document and prepare and furnish without
charge to the Underwriters and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which corrects such statement or omission or
effects such compliance, and in case the Underwriters are required to deliver a
Prospectus in connection with sales of any of the Securities at any time nine
months or more after the Effective Time, upon the request of the Underwriters
but at its expense, the Seller shall prepare and deliver to the Underwriters as
many copies as the Underwriters may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Securities Act.
(d) To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Seller or the Underwriters, be required by the Securities Act or
requested by the Commission.
(e) Prior to filing with the Commission any (1) Preliminary Prospectus, (2)
supplement to the Prospectus, or document incorporated by reference in the
Prospectus, or (3) Prospectus pursuant to Rule 424 of the Rules and Regulations,
to furnish a copy thereof to the Underwriters and counsel for the Underwriters
and obtain the consent of the Underwriters to the filing.
(f) To cause the Trust to make generally available to holders of the
Securities as soon as practicable, but in any event not later than 90 days after
the close of the period covered thereby, a statement of earnings of the Trust
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Seller, Rule 158)
and covering a period of at least twelve consecutive months beginning not later
than the first day of the first fiscal quarter following the Closing Date.
(g) To use its best efforts, in cooperation with the Underwriters, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Underwriters may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the distribution of
the Securities. The Seller will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in which the
Securities have been so qualified.
(h) So long as the Securities shall be outstanding, to deliver to the
Underwriters as soon as such statements are furnished to the Seller: (1) the
annual statement as to compliance delivered to the Seller pursuant to Section
3.09 of the Master Servicing Agreement; and (2) the annual statement of a firm
of independent public accountants furnished to the Seller pursuant to Section
3.10 of the Master Servicing Agreement.
(i) So long as any of the Securities are outstanding, the Seller will
furnish to the Underwriters (i) as soon as practicable after the end of the
fiscal year all documents required to be distributed to Securityholders or filed
with the Commission on behalf of the Trust pursuant to the Exchange Act, or any
order of the Commission thereunder and (ii) from time to time, any other
information concerning the Seller as Underwriters may reasonably request only
insofar as such information reasonably relates to the Registration Statement or
the transactions contemplated by the Basic Documents.
(j) To apply the net proceeds from the sale of the Securities in the manner
set forth in the Prospectus.
Section 6. Conditions to the Underwriters' Obligations
The obligations of the Underwriters to purchase the Securities pursuant to
this Agreement are subject to: (1) the accuracy on and as of the Closing Date of
the representations and warranties on the part of the Seller herein contained;
(2) the performance by the Seller of all of its obligations hereunder; and (3)
the following conditions as of the Closing Date:
(a) The Underwriter shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall have been
complied with.
(b) Neither Underwriter shall have discovered and disclosed to the Seller
on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Kilpatrick Stockton
LLP, counsel for the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Sale Agreement, the
Master Servicing Agreement, the Administration Agreement, the Indenture, the
Trust Agreement, the Securities, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriters, and the Seller shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(d) Cadwalader, Wickersham & Taft shall have furnished to the Underwriters
their written opinion, as counsel to the Seller, the Master servicer and the
Administrator, addressed to the Underwriters and dated the Closing Date, in form
and substance satisfactory to the Underwriters, to the effect that:
(i) The Seller is existing in good standing as a national banking
association organized under the laws of the United States of America.
(ii) The Seller has full corporate power and authority to enter into
and fulfill its obligations under the Trust Agreement, the Sale Agreement
and this Agreement.
(iii) The Trust Agreement, the Sale Agreement and this Agreement have
been duly authorized, executed and delivered by the Seller.
(iv) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over the Seller is required for the consummation by the Seller
of the transactions contemplated by the Trust Agreement, the Sale Agreement
and this Agreement, except such consents, approvals, authorizations,
registrations and qualifications as may be required under the Securities
Act or State securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Underwriters or as have been
previously obtained.
(v) The direction by the Seller to the Eligible Lender Trustee to
execute, issue, authenticate and deliver the Certificates has been duly
authorized by the Seller and, assuming that the Eligible Lender Trustee has
been duly authorized to do so, when executed, authenticated and delivered
by the Eligible Lender Trustee against payment of the agreed upon
consideration therefor in accordance with this Agreement, the Certificates
will be validly issued and outstanding and will be entitled to the benefits
of the Trust Agreement.
(vi) The direction of the Eligible Lender Trustee to the Indenture
Trustee to issue, authenticate and deliver the Notes has been duly
authorized by the Eligible Lender Trustee and, assuming that the Indenture
Trustee has been duly authorized to do so, when authenticated and delivered
by the Indenture Trustee against payment therefor in accordance with the
Agreement, the Notes will constitute the legal, valid and binding
obligations of the Trust, entitled to the benefits of the Indenture.
(vii) First Union is existing in good standing as a national banking
association organized under the laws of the United States of America.
(viii) First Union has full corporate power and authority to enter
into and fulfill its obligations under the Master Servicing Agreement and
the Administration Agreement.
(ix) The Master Servicing Agreement and the Administration Agreement
have been duly authorized, executed and delivered by First Union.
(x) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over First Union is required for the consummation by First
Union of the transactions contemplated by the Master Servicing Agreement
and the Administration Agreement, except such consents, approvals,
authorizations, registrations and qualifications as have been obtained.
(xi) This Agreement, the Sale Agreement, the Trust Agreement, the
Indenture, the Master Servicing Agreement and the Administration Agreement,
assuming the due authorization, execution and delivery of such agreements
by the other parties thereto, constitute the legal, valid and binding
agreements of the Seller, the Master Servicer and the Administrator, as
applicable, enforceable against the Seller, the Master Servicer and the
Administrator, as applicable, in accordance with their terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (y) the qualification that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion, with respect to such remedies, of
the court before which any proceedings with respect thereto may be brought
to the extent that such remedy with respect to indemnification for
Securities Act liability is found to be against public policy.
(xii) The conditions to the use by the Seller of a registration
statement on Form S-3 under the Securities Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus.
(xiii) The Registration Statement and any amendments thereto have
become effective under the Securities Act; to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and not withdrawn and no proceedings for that
purpose have been instituted or threatened and not terminated; and the
Registration Statement, the Prospectus and each amendment or supplement
thereto, as of their respective effective or issue dates (other than the
financial and statistical information contained therein, as to which such
counsel need express no opinion), complied as to form in all material
respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder.
(xiv) To the best of such counsel's knowledge, there are no material
contracts, indentures or other documents of a character required to be
described or referred to in the Registration Statement or, the Prospectus
or to be filed as exhibits to the Registration Statement other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto.
(xv) The statements in the Prospectus under the headings "SUMMARY OF
TERMS--Tax Considerations" and "--ERISA Considerations" and "CERTAIN LEGAL
ASPECTS OF THE FINANCED STUDENT LOANS," "ERISA CONSIDERATIONS" and "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES," to the extent that they constitute
matters of federal law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material respects with
respects to those consequences or aspects that are discussed.
(xvi) The Sale Agreement, the Indenture, the Master Servicing
Agreement, the Administration Agreement and the Trust Agreement conform in
all material respect to the description thereof contained in the Prospectus
and the Trust is not required to be registered under the Investment Company
Act of 1940, as amended.
(xvii) The Sale Agreement, the Master Servicing Agreement and the
Administration Agreement and are not required to be qualified under the
Trust Indenture Act of 1939, as amended,
(xviii) Neither the Seller nor the Trust is an "investment company" or
under the control of an "investment company" as such terms are defined in
the 1940 Act.
(xix) Opinion that the Trust will be taxed as partnership.
(xx) The Notes and the Certificates will, when issued, conform to the
descriptions thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters to the effect that no facts have come
to the attention of such counsel which lead them to believe that: (a) the
Registration Statement (other than the documents incorporated therein by
reference and the financial and statistical information contained therein, as to
which no opinion shall be given at the time it became effective, or at the date
of such opinion) contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (b) the Prospectus
(other than (i) the information incorporated therein by reference (ii) the
information with respect to the Eligible Lender Trustee and the Indenture
Trustee, and (iii) the financial, statistical and numerical information
contained therein, as to which no opinion shall be expressed) contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Underwriters shall have received the favorable opinion, dated the
Closing Date of Cadwalader, Wickersham & Taft, counsel to the Seller, addressed
to the Seller and satisfactory to the Rating Agencies and the Underwriters, with
respect to certain matters relating to the transfer of the Financed Student
Loans to the Trust, and such counsel shall have consented to reliance on such
opinion by the Rating Agencies as though such opinion had been addressed to each
such party.
(f) First Union shall have furnished to the Underwriters a written opinion
of counsel to First Union (who may be an employee of First Union or of an
affiliate of First Union), addressed to the Underwriters and dated the Closing
Date, in form and substance satisfactory to the Underwriters, to the effect
that:
(i) The execution, delivery and performance of the Master Servicing
Agreement and the Administration Agreement by First Union and the
consummation of the transactions contemplated thereby do not and will not
conflict with or result in a material breach or violation of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel and to which First Union is a party or by
which First Union is bound or to which any of the property or assets of
First Union or any of its subsidiaries is subject. Nor will such actions
result in any violation of the provisions of the articles of association or
bylaws of First Union or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over First
Union or any of its properties or assets.
(ii) There are no actions, proceedings or investigations pending
before or, to the best knowledge of such counsel, threatened by any court,
administrative agency or other tribunal to which First Union is a party or
of which any of its properties is the subject: (a) which if determined
adversely to First Union would have a material adverse effect on the
business, results of operations or financial condition of First Union; (b)
asserting the invalidity of the Master Servicing Agreement or the
Administration Agreement; (c) seeking to prevent the consummation by First
Union of any of the transactions contemplated by the Master Servicing
Agreement or the Administration Agreement, as the case may be; or (d) which
might materially and adversely affect the performance by First Union of its
obligations under, or the validity or enforceability of, the Master
Servicing Agreement or the Administration Agreement.
(g) Counsel for the Seller (who may be an employee of the Seller or an
affiliate of the Seller) shall have furnished to the Underwriters its written
opinion, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) The execution, delivery and performance of this Agreement, the
Sale Agreement and the Trust Agreement by the Seller, the consummation of
the transactions contemplated hereby and thereby, and the issuance and
delivery of the Securities do not and will not conflict with or result in a
material breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Seller
is a party or by which the Seller is bound or to which any of the property
or assets of the Seller or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the articles of
association or bylaws of the Seller or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Seller or any of its properties or assets.
(ii) There are no actions, proceedings or investigations pending
before or, to the best knowledge of such counsel, threatened by any court,
administrative agency or other tribunal to which the Seller is a party or
of which any of its properties is the subject: (a) which if determined
adversely to Seller would have a material adverse effect on the business,
results of operations or financial condition of the Seller; (b) asserting
the invalidity of the Sale Agreement, the Trust Agreement, the Indenture or
the Securities; (c) seeking to prevent the issuance of the Securities or
the consummation by First Union of any of the transactions contemplated by
the Sale Agreement, the Trust Agreement, the Indenture or this Agreement,
as the case may be; or (d) which might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, the Sale Agreement, the Trust Agreement, the Indenture,
this Agreement or the Securities.
(h) The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of counsel for the Underwriters, with
respect to the issue and sale of the Securities, the Registration Statement,
this Agreement, the Prospectus and such other related matters as the
Underwriters may reasonably require.
(i) The Underwriters shall have received an opinion of
- ----------------------, special student loan counsel to the Underwriters and, in
the case of clause (iii) below, special student loan counsel to the Eligible
Lender Trustee, dated the Closing Date, satisfactory in form and substance to
the Underwriters, to the effect that:
(i) The agreements implementing the Basic Documents, and the
transactions contemplated by the Basic Documents, conform in all material
respects to the applicable requirements of the Higher Education Act, and
that, upon the due authorization, execution and deliver of the Basic
Documents and the consummation of such transactions, the Financed Student
Loans, legal title to which will be held by the Eligible Lender Trustee on
behalf of the Trust, will qualify, subject to compliance with all
applicable origination and servicing requirements, for all applicable
federal assistance payments, including federal reinsurance and federal
interest subsidies and special allowance payments.
(ii) Such counsel has examined the Registration Statement and the
Prospectus, and nothing has come to such counsel's attention that would
lead such counsel to believe that, solely with respect to the Higher
Education Act and the student loan business, the Registration Statement or
the Prospectus or any amendment or supplement thereto as of the respective
dates there of or on the Closing Date contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein not misleading.
(iii) The Eligible Lender Trustee is an "eligible lender" as such term
is defined in section 435(d) of the Higher Education Act for purposes of
holding legal title to the Financed Student Loans.
(j) The Underwriters shall have received an opinion of counsel to each
Guarantor dated the Closing Date and satisfactory in form and substance to the
Underwriters and their counsel, to the effect that:
(i) Such Guarantor has been duly incorporated or organized, as the
case may be, and is validly existing as a non-profit corporation or other
entity in good standing under the laws of its organization with full power
and authority (corporate and other) to own its properties and conduct its
business, as presently conducted by it, and to enter into and perform its
obligations under the applicable Guarantee Agreement (and the agreements
with the Department under Section 428 of the Higher Education Act to the
extent relevant to such Guarantor's obligations under such Guarantee
Agreement) to which it is a party, and had at all relevant times, and now
has, the power, authority and legal right to guarantee the Financed Student
Loans covered by such Guarantee Agreement and to receive, subject to
compliance with all applicable conditions, restrictions and limitations of
the Higher Education Act, reinsurance payments from the Department with
respect to claims paid by it on such Financed Student Loans.
(ii) Such Guarantor is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render such Guarantor's obligation under its Guarantee
Agreement to guarantee the Financed Student Loans covered thereby
unenforceable by or on behalf of the Trust.
(iii) The Guarantee Agreement (and the agreements with the Department
under Section 428 of the Higher Education Act to the extent relevant to
such Guarantor's obligations under such Guarantee Agreement) to which such
Guarantor is a party has been duly authorized, executed and delivered by
such Guarantor and is the legal, valid and binding obligation of such
Guarantor enforceable against such Guarantor in accordance with its terms,
except (x) the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws nor or
hereafter in effect relating to creditors' rights and (y) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iv) Neither the execution and delivery by such Guarantor of the
Guarantee Agreement to which it is a party, nor the consummation by such
Guarantor of the transactions contemplated therein nor the fulfillment of
the terms thereof by such Guarantor will conflict with, result in a breach,
violation or acceleration of, or constitute a default under, any term or
provision of the organizational documents of such Guarantor or any
indenture or other agreement or instrument to which such Guarantor is a
party or by which such Guarantor is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to such
Guarantor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over such Guarantor.
(v) There are no actions, proceedings or investigations pending or, to
the best of such counsel's knowledge after due inquiry, threatened against
such Guarantor before or by any governmental authority that might
materially and adversely affect the performance by such Guarantor of its
obligations under, or the validity or enforceability of, the Guarantee
Agreement (or the agreements with the Department under Section 428 of the
Higher Education Act to the extent relevant to such Guarantor's obligations
under such Guarantee Agreement) to which it is a party.
(k) The Underwriters shall have received an opinion of -------------------,
counsel to the Indenture Trustee, dated the Closing Date and satisfactory in
form and substance to the Underwriters and its counsel, to the effect that:
(i) The Indenture Trustee is a New York banking corporation duly
incorporated or organized under the laws of New York.
(ii) The Indenture Trustee has the full corporate trust power to
accept the office of indenture trustee under the Indenture and the
Administration Agreement.
(iii) The execution and delivery of the Indenture and the
Administration Agreement and the performance by the Indenture Trustee of
its obligations under the Indenture and the Administration Agreement, have
been duly authorized by all necessary action of the Indenture Trustee and
each has been duly executed and delivered by the Indenture Trustee.
(iv) The Indenture and the Administration Agreement constitute valid
and binding obligations of the Indenture Trustee enforceable against the
Indenture Trustee in accordance with their terms under the laws of the
State of New York and the Federal law of the United States.
(v) The execution and delivery by the Indenture Trustee of the
Indenture and the Administration Agreement and the acceptance of the
Indenture do not require any consent, approval or authorization of, or any
registration or filing with, any New York or United States Federal
governmental authority, other than the qualification of the Indenture
Trustee under the Trust Indenture Act.
(vi) Each of the Notes has been duly authenticated by the Indenture
Trustee.
(vii) Neither the consummation by the Indenture Trustee of the
transactions contemplated in the Indenture or the Administration Agreement
nor the fulfillment of the terms thereof by the Indenture Trustee will
conflict with, result in the breach or violation of, or constitute a
default under any law or the charter, by-laws or other organizational
documents of the Indenture Trustee or the terms of any indenture or other
agreement or instrument to which the Indenture Trustee or any of its
subsidiaries is a party or is bound or any judgment, order or decree
applicable to the Indenture Trustee or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Indenture Trustee or any of its
subsidiaries.
(viii) There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against the
Indenture Trustee (as indenture trustee under the Indenture or in its
individual capacity) before or by any governmental authority that might
materially and adversely affect the performance by the Indenture Trustee of
its obligations under, or the validity or enforceability of, the Indenture
or the Administration Agreement.
(ix) The execution, delivery and performance by the Indenture Trustee
of the Indenture and the Administration Agreement will not subject any of
the property or assets of the Trust or any portion thereof, to any lien
created by or arising under the Indenture Trustee that are unrelated to the
transactions contemplated in such agreements.
(l) The Underwriters shall have received an opinion of counsel to the
Eligible Lender Trustee, dated the Closing Date and satisfactory in form and
substance to the Underwriters and their counsel, to the effect that:
(i) The Eligible Lender is a national banking association duly
incorporated or organized and validly existing under the laws of the United
States.
(ii) The Eligible Lender Trustee has the full corporate trust power to
accept the office of eligible lender trustee under the Trust Agreement and
to enter into and perform its obligations under the Trust Agreement, the
Sale Agreement and the Master Servicing Agreement and, on behalf of the
Trust, under the Indenture, the Sale Agreement, the Master Servicing
Agreement, the Administration Agreement and the Guarantee Agreements.
(iii) The execution and delivery of the Trust Agreement, the Sale
Agreement and the Master Servicing Agreement and, on behalf of the Trust,
of the Indenture, the Sale Agreement, the Master Servicing Agreement, the
Administration Agreement and the Guarantee Agreements, and the performance
by the Eligible Lender Trustee of its obligations under the Trust
Agreement, the Indenture, the Sale Agreement, the Master Servicing
Agreement, the Administration Agreement and the Guarantee Agreements, have
been duly authorized by all necessary action of the Eligible Lender Trustee
and each has been duly executed and delivered by the Eligible Lender
Trustee.
(iv) The Trust Agreement, the Sale Agreement, the Master Servicing
Agreement and the Administration Agreement constitute valid and binding
obligations of the Eligible Lender Trustee enforceable against the Eligible
Lender Trustee in accordance with their terms.
(v) The execution and delivery by the Eligible Lender Trustee of the
Trust Agreement, the Sale Agreement and the Master Servicing Agreement and,
on behalf of the Trust, of the Indenture, the Sale Agreement, the Master
Servicing Agreement, the Administration Agreement and the Guarantee
Agreements, do not require any consent, approval or authorization of, or
any registration or filing with, any applicable governmental authority.
(vi) Each of the Notes has been duly executed and delivered by the
Eligible Lender Trustee, on behalf of the Trust. Each of the Certificates
has been duly executed and delivered by the Eligible Lender Trustee, as
eligible lender trustee and authenticating agent.
(vii) Neither the consummation by the Eligible Lender Trustee of the
transactions contemplated in the Sale Agreement, the Master Servicing
Agreement, the Indenture, the Trust Agreement or the Administration
Agreement nor the fulfillment of the terms thereof by the Eligible Lender
Trustee, will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter, by-laws or other
organizational documents of the Eligible Lender Trustee or the terms of any
indenture or other agreement or instrument to which the Eligible Lender
Trustee or any of its subsidiaries is a party or is bound or any judgment,
order or decree applicable to the Eligible Lender Trustee or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Eligible
Lender Trustee or any of its subsidiaries.
(viii) There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against the
Eligible Lender Trustee (as eligible lender trustee under the Trust
Agreement or in its individual capacity) before or by any governmental
authority that might materially and adversely affect the performance by the
Eligible Lender Trustee of its obligations under, or the validity or
enforceability of, the Trust Agreement, the Sale Agreement or the Master
Servicing Agreement.
(ix) The execution, delivery and performance by the Eligible Lender
Trustee of the Sale Agreement, the Master Servicing Agreement, the
Indenture, the Trust Agreement or any Guarantee Agreement will not subject
any of the property or assets of the Trust or any portion thereof, to any
lien created by or arising under the Eligible Lender Trustee that are
unrelated to the transactions contemplated in such agreements.
(m) The Seller shall have furnished to the Underwriters a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a Vice
President stating that:
(i) The representations and warranties of the Seller in Section 1 of
this Agreement are true and correct as of the Closing Date; and the Seller
has complied with all its agreements contained herein; and
(ii) Such person has carefully examined the Registration Statement and
the Prospectus and, in his opinion (x) as of the Effective Date, the
Registration Statement and Prospectus did not include an untrue statement
of a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and (y) since the Effective Date no event has occurred which should have
been set forth in a supplement or amendment to the Registration Statement
or the Prospectus.
(n) The Eligible Lender Trustee shall have furnished to the Underwriters a
certificate of the Eligible Lender Trustee, signed by one or more duly
authorized officers of the Eligible Lender Trustee, dated the Closing Date, as
to the due authorization, execution and delivery of the Trust Agreement and the
Sale Agreement by the Eligible Lender Trustee and the acceptance by the Eligible
Lender Trustee of the trusts created thereby and the due execution,
authentication and delivery of the Certificates by the Eligible Lender Trustee
thereunder and such other matters as the Underwriters shall reasonably request.
(o) The Notes shall have been rated "---------" by
- -------------------------, and "------------" by --------------------------- and
the Certificates shall have been rated "-----" by -------------------------- and
"------" by -----------------.
(p) The Underwriters shall have received at or before the Closing Date,
from KPMG Peat Marwick LLP, letters, dated as of the date of this Agreement,
substantially in the forms of Exhibit A and Exhibit B hereto (the "Initial
Letters") and bring down letters dated as of the Closing Date, (A) confirming
that they are independent public accountants within the meaning of the
Securities Act, and are in compliance with, the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (B) stating the conclusions and findings of such firm with respect
to the financial information and other matters covered by its letter, and (C) in
the case of the bring-down letters, confirming in all material respects the
conclusions and finding set forth in the Initial Letters.
(q) Prior to the Closing Date, counsels for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Seller in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsels for the Underwriters.
(r) Subsequent to the execution and delivery of this Agreement none of the
following shall have occurred: (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the over-the-counter market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such exchange or
by any other regulatory body or governmental authority having jurisdiction; (ii)
a banking moratorium shall have been declared by federal or state authorities;
(iii) the United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States; or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States shall be
such) as to make it, in the judgment of the Underwriters, impractical or
inadvisable to proceed with the public offering or delivery of the Certificates
on the terms and in the manner contemplated in the Prospectus.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Seller at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 7. Payment of Expenses
As between the Seller and the Underwriters, the Seller agrees to pay: (a)
the costs incident to the authorization, issuance, sale and delivery of the
Securities and any taxes payable in connection therewith; (b) the costs incident
to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of reproducing and distributing
this Agreement; (e) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 5(g) hereof
and of preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Underwriters); (f) any fees charged by securities rating services for rating the
Securities; and (g) all other costs and expenses incident to the performance of
the obligations of the Seller (including costs and expenses of its counsel);
provided that, except as provided in this Section 7, the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their
respective counsel, any transfer taxes on the Securities which they may sell and
the expenses of advertising any offering of the Securities made by the
Underwriters.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 6, Section 10 or Section 11, the Seller shall reimburse
the Underwriters for all reasonable out-of-pocket expenses, including fees and
disbursements of Kilpatrick Stockton LLP.
Section 8. Indemnification and Contribution
(a) (1) The Seller and First Union agree to indemnify and hold harmless
each of the Underwriters, their directors and each person, if any, who controls
the Underwriters within the meaning of Section 15 of the Securities Act from and
against any and all loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which the Underwriters, their directors or any such controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Prospectus or the Prospectus or
(iv) the omission or alleged omission to state, in the Preliminary Prospectus or
the Prospectus, a material fact required to be stated therein or necessary to
make the statements in the Preliminary Prospectus or the Prospectus, in the
light of the circumstances under which they were made, not misleading and shall
reimburse each Underwriter, each such director and each such controlling person
promptly upon demand for any legal or other expenses reasonably incurred by such
Underwriter, such director or such controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action, as such expenses are incurred; provided, however,
the Seller and First Union shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus, the Preliminary Prospectus or the
Registration Statement in reliance upon and in conformity with written
information furnished to the Seller by or on behalf of any of the Underwriters
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Seller and First Union may otherwise have to
the Underwriters, its directors or any controlling person of the Underwriters.
(2) The Seller and First Union agree to indemnify and hold harmless
- --------------------, its directors and each person, if any, who controls
- -------------------- within the meaning of Section 15 of the Securities Act from
and against any and all loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which --------------, its directors or any such controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus used after ---------, 1997 (a "Market Making Prospectus"), or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
- --------------------, each such director and each such controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
- --------------------, such director or such controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action, as such expenses are incurred; provided,
however, the Seller and First Union shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in a Market Making Prospectus in reliance upon and in
conformity with written information furnished to the Seller by
- -------------------- specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Seller and First Union may
otherwise have to --------------------, its directors or any controlling person
of ------------------ under this Agreement.
(b) Each Underwriter severally agrees to indemnify and hold harmless each
of the Seller and First Union, their directors, each of their officers who
signed the Registration Statement, and each person, if any, who controls the
Seller and First Union within the meaning of Section 15 of the Securities Act
against any and all loss, claim, damage or liability, or any action in respect
thereof, to which the Seller or First Union or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) an untrue, statement or alleged untrue statement of a material
fact contained in the Registration Statement, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus or the Prospectus or (iv) the omission or alleged
omission to state therein a material fact required to be stated in the
Preliminary Prospectus or the Prospectus or necessary to make the statements in
the Preliminary Prospectus or the Prospectus, in the light of the circumstances
under which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Seller by or on behalf of the Underwriters specifically for
inclusion therein, and shall reimburse the Seller and any such director, officer
or controlling person for any legal or other expenses reasonably incurred by the
Seller or any director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which the Underwriters may
otherwise have to the Seller and First Union or any such director, officer or
controlling person. Notwithstanding anything to the contrary contained in this
Section 8, -------------------- shall have no obligation to indemnify any party
for any loss, claim, damage or liability or contribute to any such loss, claim,
damage or liability in respect of untrue statements or alleged untrue statements
of material fact or omissions or alleged omissions to state a material fact
contained in any Market Making Prospectus.
(c) Promptly after receipt by any indemnified party under this Section 8 of
notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure, and provided, further, the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 8 consist of the Underwriters or any of their
directors and controlling persons, or by the Seller, if the indemnified parties
under this Section 8 consist of the Seller or any of the Seller's directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(a) and (b), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or (b) in respect of any loss, claim, damage or liability, or
any action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Seller on
the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Seller on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of the Underwriters and the Seller shall be deemed to
be in such proportions that the Underwriters are responsible for their pro rata
portion of such losses, liabilities, claims, damages and expenses determined in
accordance with the ratio that the difference between the purchase price paid to
the Seller by the Underwriters and the aggregate resale price received by the
Underwriters bears to the purchase price paid to the Seller by the Underwriters,
and the Seller shall be responsible for the balance.
The relative fault of the Underwriters and the Seller shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Seller or by the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission and other equitable
considerations,
The Seller and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall the Underwriters be responsible for any amount in excess
of the difference between the purchase price paid to the Seller by the
Underwriters and the aggregate resale price received by the Underwriters. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The Underwriters confirm that the information set forth [(i) in the
last paragraph on the cover page, (ii) in the second paragraph on page ----- and
(iii) in the first sentence of the fourth paragraph under the caption
"Underwriting" in the Prospectus] is correct and constitutes the only
information furnished in writing to the Seller by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
Section 9. Representations, Warranties and Agreements to Survive Delivery
All representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Seller submitted pursuant hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or controlling persons
thereof, or by or on behalf of the Seller and shall survive delivery of any
Securities to the Underwriters.
Section 10. Default by One of the Underwriters
If one of the Underwriters participating in the public offering of the
Securities shall fail at the Closing Date to purchase the Securities which it is
obligated to purchase hereunder (the "Defaulted Securities"), then the
non-defaulting Underwriter shall have the right, within 24 hours thereafter, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth. If, however, the
non-defaulting Underwriter has not completed such arrangements within such
24-hour period, then:
(1) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of the Securities to be
purchased pursuant to this Agreement, the non-defaulting Underwriter shall
be obligated to purchase the full amount thereof, or
(2) if the aggregate principal amount of Defaulted Securities exceeds
10% of the aggregate principal amount of the Securities to be purchased
pursuant to this Agreement, this Agreement shall terminate, without any
liability on the part of the non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve a defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
10, the non-defaulting Underwriter and the Seller shall have the right to
postpone the Closing Date for a period not exceeding five Business Days in order
that any required changes in the Registration Statement or Prospectus or in any
other documents or arrangements may be effected.
Section 11. Termination of Agreement
The Underwriters may terminate this Agreement immediately upon notice to
the Seller, at any time at or prior to the Closing Date if any of the events or
conditions described in Section 6(r) of this Agreement shall occur and be
continuing. In the event of any such termination, the covenant set forth in
Section 5(g), the provisions of Section 7, the indemnity agreement set forth in
Section 8, and the provisions of Sections 9 and 13 shall remain in effect.
Section 12. Notices
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to First Union Capital Markets Corp., shall be delivered or sent by
mail, telex or facsimile transmission One First Union TW-8, 301 South College
Street, Charlotte, North Carolina 28288, Attention: [------------------- (Fax:
(704) ----------)], and if to the Co-Underwriter, to --------------------,
- -------------------------------------; or
(b) if to the Seller, shall be delivered or sent by mail, telex or
facsimile transmission to First Union National Bank, 301 South College Street,
Attention: Levis R. Hughes, III.
Section 13. Persons Entitled to the Benefit of this Agreement
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Seller, and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any of the Underwriters within the
meaning of Section 15 of the Securities Act, and for the benefit of directors of
the Seller, officers of the Seller who have signed the Registration Statement
and any person controlling the Seller within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
Section 14. Survival
The respective indemnities, representations, warranties and agreements of
the Seller and the Underwriters contained in this Agreement, or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
Section 15. Definition of the Term "Business Day"
For purposes of this Agreement, "Business Day" means any day other than (a)
a Saturday or Sunday, or (b) a legal holiday in the State of North Carolina or
(c) a day on which banking or savings and loan institutions in the State of
North Carolina or the state in which the Corporate Trust Office is located are
authorized or obligated by law or executive order to be closed or (d) a day on
which the New York Stock Exchange, Inc. is closed for trading.
Section 16. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Section 17. Counterparts
This Agreement may be executed in counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original but all such counterparts shall together constitute one and the same
instrument.
Section 18. Headings
The headings herein are inserted for convenience of reference only and are
not intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
<PAGE>
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
<PAGE>
If the foregoing correctly sets forth the agreement between the Seller and
the Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
FIRST UNION NATIONAL BANK
By:-----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
FIRST UNION CAPITAL MARKETS CORP.
By:--------------------------------
Name:
Title:
By: -------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
Initial Principal Amount of Securities Purchased by Underwriters:
Class A-1 Class A-2
Underwriter Notes Notes Certificates
FIRST UNION CAPITAL
MARKETS CORP. $------------ $----------- $----------------
- ----------------------- $------------ $----------- $----------------
Total $------------ $----------- $----------------
Purchase Price for Securities Purchased by Underwriters:
Class A-1 Class A-2
Underwriter Notes Notes Certificates
FIRST UNION CAPITAL
MARKETS CORP. ----% ------% --------%
- ------------------------- ----% ------% --------%
The aggregate proceeds to the Seller from the sale of the Securities to the
Underwriters will be approximately $-----------, plus accrued interest in the
amount of $---------.
================================================================================
INDENTURE
between
FIRST UNION STUDENT LOAN TRUST 1997-1,
as Issuer
and
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
Dated as of June 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
GRANTING CLAUSE
ARTICLE I --DEFINITIONS AND USAGE
SECTION 1.01. DEFINITIONS AND USAGE
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
ARTICLE II -- THE NOTES
SECTION 2.01. FORM
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY
SECTION 2.03. TEMPORARY NOTES
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES
SECTION 2.06. PERSONS DEEMED OWNER
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST;
NOTEHOLDERS' INTEREST INDEX CARRYOVER
SECTION 2.08. CANCELLATION
SECTION 2.09. RELEASE OF COLLATERAL
SECTION 2.10. BOOK-ENTRY NOTES
SECTION 2.11. NOTICES TO CLEARING AGENCY
SECTION 2.12. DEFINITIVE NOTES
ARTICLE III --COVENANTS
SECTION 3.01. PAYMENT TO NOTEHOLDERS
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST
SECTION 3.04. EXISTENCE
SECTION 3.05. PROTECTION OF INDENTURE TRUST ESTATE
SECTION 3.06. OPINIONS AS TO INDENTURE TRUST ESTATE
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF FINANCED STUDENT
LOANS
SECTION 3.08. NEGATIVE COVENANTS
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS
SECTION 3.11. SUCCESSOR OR TRANSFEREE
SECTION 3.12. NO OTHER BUSINESS
SECTION 3.13. NO BORROWING
SECTION 3.14. OBLIGATIONS OF MASTER SERVICER AND ADMINISTRATOR
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES
SECTION 3.16. CAPITAL EXPENDITURES
SECTION 3.17. RESTRICTED PAYMENTS
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS
ARTICLE IV -- SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 4.02. APPLICATION OF TRUST MONEY
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT
SECTION 4.04. AUCTION OF FINANCED STUDENT LOANS
ARTICLE V -- REMEDIES
SECTION 5.01. EVENTS OF DEFAULT
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE
SECTION 5.04. REMEDIES; PRIORITIES
SECTION 5.05. OPTIONAL PRESERVATION OF THE FINANCED STUDENT LOANS
SECTION 5.06. LIMITATION OF SUITS
SECTION 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST
SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE
SECTION 5.10. DELAY OR OMISSION NOT A WAIVER
SECTION 5.11. CONTROL BY NOTEHOLDERS
SECTION 5.12. WAIVER OF PAST DEFAULTS
SECTION 5.13. UNDERTAKING FOR COSTS
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS
SECTION 5.15. ACTION ON NOTES
SECTION 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS
ARTICLE VI --THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER
SECTION 6.05. NOTICE OF DEFAULTS
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS
SECTION 6.07. COMPENSATION AND INDEMNITY
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION
ARTICLE VII --NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS
SECTION 7.03. REPORTS BY ISSUER
SECTION 7.04. PROVISIONS OF THIS ARTICLE SUPERSEDED BY TRUST INDENTURE ACT
ARTICLE VIII -- ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY
SECTION 8.02. TRUST ACCOUNTS
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS
SECTION 8.04. RELEASE OF INDENTURE TRUST ESTATE
SECTION 8.05. OPINION OF COUNSEL
ARTICLE IX -- SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES
ARTICLE X -- MISCELLANEOUS
SECTION 10.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
SECTION 10.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE
SECTION 10.03. ACTS OF NOTEHOLDERS
SECTION 10.04. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND
RATING AGENCIES
SECTION 10.05. NOTICES TO NOTEHOLDERS; WAIVER
SECTION 10.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS
SECTION 10.07. CONFLICT WITH TRUST INDENTURE ACT
SECTION 10.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS
SECTION 10.09. SUCCESSORS AND ASSIGNS
SECTION 10.10. SEPARABILITY
SECTION 10.11. BENEFITS OF INDENTURE
SECTION 10.12. LEGAL HOLIDAYS
SECTION 10.13. GOVERNING LAW
SECTION 10.14. COUNTERPARTS
SECTION 10.15. RECORDING OF INDENTURE
SECTION 10.16. TRUST OBLIGATIONS
SECTION 10.17. NO PETITION
SECTION 10.18. INSPECTION
Appendix A:.......Definitions and Usage
Schedule A:.......Schedule of Financed Student Loans
Schedule B:.......Schedule of Financed Student Loan Files
Exhibit A:........Form of Class A-1 Note
Exhibit B:........Form of Class A-2 Note
Exhibit C:........Form of Note Depository Agreement
<PAGE>
INDENTURE, dated as of June 1, 1997, between FIRST UNION STUDENT LOAN TRUST
1997-1, a Delaware business trust (the "Issuer"), and BANKERS TRUST COMPANY, a
New York banking corporation, as trustee and not in its individual capacity (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Issuer's Floating Rate Asset
Backed Notes, Class A-1 (the "Class A-1 Notes") and Class A-2 (the "Class A-2
Notes and, together with the Class A-1 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer (and, with respect to the Financed Student Loans, the Eligible
Lender Trustee) hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Noteholders, all the Issuer's right, title and
interest in and to the following:
(a) the Financed Student Loans, and all obligations of the Obligors
thereunder including all moneys paid thereunder on or after the Cutoff Date;
(b) the Sale Agreement, including the right of the Issuer to cause the
Seller to repurchase Financed Student Loans from the Issuer under circumstances
described therein;
(c) the Master Servicing Agreement, including the right of the Master
Servicer to purchase Financed Student Loans from the Issuer under circumstances
described therein;
(d) each Guarantee Agreement, including the right of the Issuer to cause
the related Guarantor to make Guarantee Payments in respect of the Financed
Student Loans;
(e) all funds on deposit from time to time in the Trust Accounts, including
the amounts contained in the Reserve Account and the Collection Account, and in
all investments and proceeds thereof (including all income thereon); and
(f) all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, as
described herein, equally and ratably without prejudice, priority or distinction
among the Notes of each class, and to secure compliance with the provisions of
this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Noteholders may be adequately and effectively protected.
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. DEFINITIONS AND USAGE. Except as otherwise specified herein
or as the context may otherwise require, capitalized terms used but not defined
herein are defined in Appendix A hereto, which also contains rules as to usage
that shall be applicable herein.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
ARTICLE II
THE NOTES
SECTION 2.01. FORM. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be initially issued in book-entry form and
represented by certificates to be held on behalf of the initial Clearing Agency
in substantially the forms set forth in Exhibit A and Exhibit B, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing the Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes, if issued, shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Class A-1 Notes, set forth in Exhibit A, and the Class A-2 Notes, as set forth
in Exhibit B, are part of the terms of this Indenture.
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
Notes for original issue in an aggregate principal amount of $----------- in the
case of the Class A-1 Notes and $---------- in the case of the Class A-2 Notes.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amounts except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.03. TEMPORARY NOTES. Pending the preparation of Definitive Notes,
the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Noteholder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, 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 of the same class in any
authorized denominations and a like aggregate principal amount.
At the option of the Noteholder, Notes may be exchanged for other Notes of
the same class in any authorized denominations and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, 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 of either class 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
of such class surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by the
Noteholder thereof or such Noteholder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership or
participation in Securities Transfer Agent's Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Exchange Act.
Each transferee of a Note shall be required to represent, and each
transferee of a beneficial interest in a Book-Entry Note shall be deemed to
represent, either (a) that it is not a Benefit Plan Investor and is not using
the assets of a Benefit Plan Investor to acquire such Note or interest, or (b)
if such transferee is a Benefit Plan Investor or a Person investing the assets
of a Benefit Plan Investor, that the use of the assets of such Benefit Plan
Investor to acquire such Note or interest does not and will not constitute or
result in a non-exempt prohibited transaction in violation of Section 406 of
ERISA, Section 4975 of the Code or Similar Law. Each Note shall bear a legend
referring to the foregoing restrictions contained in this paragraph.
No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Notes, but the Indenture Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has 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 class; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within 15 days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable
without surrender thereof. If, after the delivery of such replacement Note or
payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note was
delivered or any assignee of such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Noteholder thereof of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of the Indenture
Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes of the same class duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest
(including any Noteholders' Interest Index Carryover) on such Note and for all
other purposes whatsoever, whether or not such Note be overdue, and neither the
Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST. (a)
The Notes shall accrue interest at the applicable Note Interest Rate as provided
in the forms of Notes set forth in Exhibit A and Exhibit B, and such interest
shall be payable on each Distribution Date as specified therein, subject to
Section 3.01. Any installment of interest (including any Noteholders' Interest
Index Carryover) or principal payable on any Note which is punctually paid or
duly provided for by the Issuer on the applicable Distribution Date shall be
paid to the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the Note Register on such Record Date,
except that, unless Definitive Notes have been issued pursuant to Section 2.12,
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will
be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final installment of principal
payable with respect to such Note on a Distribution Date or on the applicable
Note Final Maturity Date which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of the Class A-1 Notes and the Class A-2 Notes shall be
payable on each applicable Distribution Date in the order of priority provided
under Section 4.05(c) of the Master Servicing Agreement. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, on the date on which an Event of Default shall
have occurred and be continuing, if the Indenture Trustee or the Noteholders of
the Notes representing not less than a majority of the Outstanding Amount of the
Notes have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02. All principal payments on the Notes of either class
shall be made pro rata to the Noteholders entitled thereto. The Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Distribution Date on which the
Issuer expects that the final installment of principal of and interest (and any
Noteholders' Interest Index Carryover) 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.
(c) If the Issuer defaults on a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Note Interest Rate in any lawful manner.
The Issuer may pay such defaulted interest to the persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder a notice that
states the special record date, the payment date and the amount of defaulted
interest to be paid.
(d) The Noteholders' Interest Index Carryover for each Distribution Date
for either class of Notes (including all unpaid Noteholders' Interest Index
Carryover for prior Distribution Dates and interest accrued thereon at the
applicable Note Interest Rate for each applicable Interest Period) shall be
payable on each Distribution Date solely to the extent of funds available to be
distributed to Noteholders by the Indenture Trustee as Noteholder Interest Index
Carryover pursuant to Section 4.05(c)(x), 4.06(e)(B) or 4.06(f) of the Master
Servicing Agreement. Any Noteholders' Interest Index Carryover payable on any
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the applicable Record Date by check
mailed first-class postage prepaid to such Person's address as it appears on the
Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to the Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payment will be made by wire transfer in
immediately available funds to the account designated by such nominee. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time, unless the Issuer shall direct by an Issuer Order that they
be returned to it and so long as such Issuer Order is timely and the Notes have
not been previously disposed of by the Indenture Trustee.
SECTION 2.09. RELEASE OF COLLATERAL . Subject to Section 10.01, the
Indenture Trustee shall release property from the lien of this Indenture only
upon 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 sections 314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificates.
SECTION 2.10. BOOK-ENTRY NOTES. The Notes, upon original issuance, will be
issued in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Note Owner will receive a Definitive Note (as defined below) representing
such Note Owner's interest in such Note, except as provided in Section 2.12.
Unless and until definitive, fully registered Notes (the "Definitive Notes")
have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee may deal with the
Clearing Agency for all purposes (including the payment of principal of and
interest and other amounts on the Notes) as the authorized representative
of the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreements.
Unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest and other amounts on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.11. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency.
SECTION 2.12. DEFINITIVE NOTES. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Notes, and
the Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default, a Master Servicer Default or an
Administrator Default, Note Owners representing beneficial interests aggregating
at least a majority of the Outstanding Amount of the Notes advise the Clearing
Agency (which shall then notify the Indenture Trustee) in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Indenture Trustee will cause the
Clearing Agency to notify all Note Owners, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the holders of the Definitive Notes as Noteholders.
ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT TO NOTEHOLDERS. The Issuer will duly and punctually
pay the principal of (subject to the parenthetical in the following sentence),
interest on and any Noteholders' Interest Index Carryover (but only to the
extent provided in Sections 2.07(d) and 8.02(c)) with respect to the Notes in
accordance with the terms of the Notes and this Indenture and the priorities set
forth or referred to herein. Without limiting the foregoing, subject to Section
8.02(c), the Issuer will cause to be distributed that portion of the amounts on
deposit in the Trust Accounts on a Distribution Date (other than any Eligible
Investments deposited therein that will mature on the Business Day preceding a
subsequent Distribution Date), which the Noteholders are entitled to receive
pursuant to the Master Servicing Agreement to Noteholders in accordance with the
Master Servicing Agreement. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest (including any Noteholders'
Interest Index Carryover) or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. The Issuer hereby initially appoints the Indenture Trustee to serve
as its agent for the foregoing purposes. The Issuer will give prompt written
notice to the Indenture Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts distributed from the Collection
Account or Reserve Account pursuant to Section 8.02(c) shall be made on behalf
of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so distributed from the Collection Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
On or before the Business Day next preceding each Distribution Date, the
Issuer shall distribute or cause to be distributed to the Indenture Trustee (or
any other Paying Agent) an aggregate sum sufficient to pay the amounts then
becoming due under the Notes and/or Certificates, such sum to be held in trust
for the benefit of the Persons entitled thereto and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its action
or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and the Indenture Trustee as
Paying Agent 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 Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Noteholder).
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect its existence,
rights and franchises as a trust under the laws of the State of 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, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Indenture Trust Estate.
SECTION 3.05. PROTECTION OF INDENTURE TRUST ESTATE. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Indenture Trust
Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
SECTION 3.06. OPINIONS AS TO INDENTURE TRUST ESTATE. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the lien and security interest of
this Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) On or before April 30 in each calendar year, beginning in 1998, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until April 30 in the following calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF FINANCED STUDENT
LOANS. (a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Indenture Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale Agreement, Master 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 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, the Master
Servicing Agreement and Administration 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 acting at the direction of the Noteholders of at least a
majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Master
Servicer Default or an Administrator Default under the Master Servicing
Agreement, the Issuer shall promptly notify the Indenture Trustee and the Rating
Agencies thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect to such default. If a Master Servicer Default
shall arise from the failure of the Master Servicer to perform any of its duties
or obligations under the Master Servicing Agreement or an Administrator Default
shall arise from the failure of the Administrator to perform any of its duties
or obligations under the Master Servicing Agreement or the Administration
Agreement, as the case may be, with respect to the Financed Student Loans, the
Issuer shall take all reasonable steps available to it to enforce its rights
under the Basic Documents in respect of such failure.
(e) As promptly as possible after the giving of notice of termination to
the Master Servicer of its rights and powers, or to the Administrator of its
rights and powers, pursuant to Section 7.01 of the Master Servicing Agreement,
the Issuer shall appoint a successor servicer (the "Successor Master Servicer"),
or a successor administrator (the "Successor Administrator"), and such Successor
Master Servicer or Administrator, as the case may be, shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Master Servicer or Administrator has not
been appointed and accepted its appointment at the time when the Master Servicer
or Administrator, as the case may be, ceases to act as Master Servicer or
Administrator, as the case may be, the Indenture Trustee without further action
shall automatically be appointed the Successor Master Servicer or Administrator,
as the case may be. The Indenture Trustee may resign as the Master Servicer or
the Administrator by giving written notice of such resignation to the Issuer and
in such event will be released from such duties and obligations, such release
not to be effective until the date a new servicer or a new administrator enters
into an agreement with the Issuer as provided below; PROVIDED, HOWEVER, that
nothing herein shall require or permit the Indenture Trustee to act as Master
Servicer, or otherwise service the Financed Student Loans, in violation of the
Higher Education Act. Upon delivery of any such notice to the Issuer, the Issuer
shall obtain a new servicer or a new administrator as the Successor Master
Servicer or Administrator under the Master Servicing Agreement. Any Successor
Master Servicer or Administrator, as the case may be, other than the Indenture
Trustee shall (i) be an established institution (A) that satisfies any
requirements of the Higher Education Act applicable to servicers and (B) whose
regular business includes the servicing or administration of student loans and
(ii) enter into a master servicing agreement or an administration agreement with
the Issuer having substantially the same provisions as the provisions of the
Master Servicing Agreement applicable to the Master Servicer or the provisions
of the Master Servicing Agreement and the Administration Agreement applicable to
the Administrator. If within 30 days after the delivery of the notice referred
to above, the Issuer shall not have obtained such a new servicer or
administrator, as the case may be, or if the Indenture Trustee is legally unable
or unwilling so to act, the Indenture Trustee may appoint, or may petition a
court of competent jurisdiction to appoint, a Successor Master Servicer or
Administrator; PROVIDED, HOWEVER, that such right to appoint or to petition for
the appointment of any such successor shall in no event relieve the Indenture
Trustee from any obligations otherwise imposed on it under the Basic Documents
until such successor has in fact assumed such appointment. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Master Servicing Agreement, and in
accordance with Section 7.02 of the Master Servicing Agreement, the Issuer shall
enter into an agreement with such successor for the servicing or administration
of the Financed Student Loans (such agreement to be in form and substance
satisfactory to the Indenture Trustee). If the Indenture Trustee shall succeed
as provided herein to the Master Servicer's duties as servicer with respect to
the Financed Student Loans, or the Administrator's duties with respect to the
Issuer and the Financed Student Loans, as the case may be, it shall do so in its
individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Master Servicer or the
Administrator, as the case may be, and the servicing or administration of the
Financed Student Loans. In case the Indenture Trustee shall become successor to
the Master Servicer or the Administrator, as the case may be, under the Master
Servicing Agreement, the Indenture Trustee shall be entitled to appoint as
Master Servicer or as Administrator, as the case may be, any one of its
affiliates, provided that such appointment shall not affect or alter in any way
the liability of the Indenture Trustee as a successor for the performance of the
duties and obligations of the Master Servicer or the Administrator in accordance
with the terms hereof.
(f) Upon any termination of the Master Servicer's or Administrator's rights
and powers pursuant to the Master Servicing Agreement, as the case may be, the
Issuer shall promptly notify the Indenture Trustee. As soon as a Successor
Master Servicer or a Successor Administrator is appointed, the Issuer shall
notify the Indenture Trustee of such appointment, specifying in such notice the
name and address of such Successor Master Servicer or such Successor
Administrator.
(g) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees that it will not, without the prior written
consent of the Indenture Trustee or the Noteholders of at least a majority in
Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any Collateral or the Basic Documents,
except to the extent otherwise provided in this Indenture or the Master
Servicing Agreement, or waive timely performance or observance by the Master
Servicer, the Administrator, the Seller, the Issuer or the Eligible Lender
Trustee under the Master Servicing Agreement; PROVIDED, HOWEVER, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Noteholders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to by the Indenture
Trustee or such Noteholders, the Issuer agrees, to execute and deliver in
furtherance of such amendment, modification, supplement or waiver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may deem necessary or appropriate in the
circumstances.
SECTION 3.08. NEGATIVE COVENANTS. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by this Indenture or any other Basic
Document, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the
Indenture Trust Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal or
interest (including any Noteholders' Interest Index Carryover) payable in
respect of, the Notes (other than amounts properly withheld from such
payments under the Code or applicable state law) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Indenture Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Indenture Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens and other liens that arise by operation of law, in each case arising
solely as a result of an action or omission of the related Obligor, and
other than as expressly permitted by the Basic Documents) or (C) permit the
lien of this Indenture not to constitute a valid first priority (other than
with respect to any such tax or other lien) security interest in the
Indenture Trust Estate.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver to
the Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1997), 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
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default
known to such Authorized Officers and the nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. (a) The
Issuer shall not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of, interest on and any Noteholders'
Interest Index Carryover with respect to all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse Federal or
[--------------] state tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
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).
(b) The Issuer shall not convey or transfer all or substantially all its
properties or assets, including those included in the Indenture Trust Estate, to
any Person, unless:
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State, (B)
expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of, interest on and
Noteholders' Interest Index Carryover, if any, with respect to all Notes
and the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Noteholders, (D) unless
otherwise provided in such supplemental indenture, expressly agrees to
indemnify, defend and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agrees by means of such supplemental indenture that
such Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse Federal or
[--------------] state tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
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 with the same effect as if such Person had been
named as the Issuer herein.
(b) [Except as expressly provided in Section 6.07,] upon a conveyance or
transfer of all the assets and properties of the Issuer pursuant to Section
3.10(b), First Union 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 First Union
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 (i) acquiring, holding and managing the Financed Student
Loans and the other assets of the Trust Estate and proceeds therefrom, (ii)
issuing the Certificates, the Excess Distribution Certificate and the Notes,
(iii) making payments thereon and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith or that are contemplated or required by the Basic
Documents.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness for borrowed money except for the Notes.
SECTION 3.14. OBLIGATIONS OF MASTER SERVICER AND ADMINISTRATOR. The Issuer
shall cause the Master Servicer to comply with Sections 3.08(a), 3.09(a) and
(b), 3.10 and 3.11 of the Master Servicing Agreement and the Administrator to
comply with Sections 3.08(b) and (c), 3.09(a) and (c), 3.10 and 4.07 thereof.
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by the Master Servicing Agreement or this Indenture, the Issuer
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.
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 Master 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 Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders, the Noteholders, the
Administrator and the Seller as contemplated by, and to the extent funds are
available for such purpose under, the Sale Agreement and the Master Servicing
Agreement. The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account except in accordance with this
Indenture and the other Basic Documents.
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Seller of its obligations
under the Sale Agreement, the Master Servicer of its obligations under the
Master Servicing Agreement or the Administrator of its obligations under the
Master Servicing Agreement or the Administration Agreement. In addition, the
Issuer shall deliver to the Indenture Trustee, within five days after the
occurrence thereof, written notice in the form of an 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 5.01(iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest (including any Noteholders' Interest Index
Carryover) thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12 and 3.13,
(v) the rights, obligations and immunities of the Indenture Trustee hereunder
(including the rights of the Indenture Trustee under Section 6.07 and the
obligations of the Indenture Trustee under Section 4.02) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when:
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an
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 requirements of Section 10.01(a) and, subject to
Section 10.02, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited with the
Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders of the particular Notes for
the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest (including any Noteholders' Interest Index Carryover); but such moneys
need not be segregated from other funds except to the extent required herein or
in the Master Servicing Agreement or required by law.
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. AUCTION OF FINANCED STUDENT LOANS. Any Financed Student Loans
remaining in the Trust as of the end of the Collection Period immediately
following the Distribution Date on which the Pool Balance is less than or equal
to 10% of the Initial Pool Balance will be offered for sale by the Administrator
(pursuant to the Administration Agreement) on behalf of Indenture Trustee as of
the Auction Distribution Date. First Union, its affiliates, and unrelated third
parties may offer bids to purchase such Financed Student Loans as of such
Auction Distribution Date. If at least two bids are received, the Indenture
Trustee will solicit and resolicit new bids from all participating bidders until
only one bid remains or the remaining bidders decline to resubmit bids. The
Indenture Trustee will accept the highest of such remaining bids if it is equal
to or in excess of the higher of the Minimum Purchase Amount and the fair market
value of such Financed Student Loans as of the end of the Collection Period
immediately preceding the Auction Distribution Date. If at least two bids are
not received or the highest bid after the resolicitation process is completed is
not equal to or in excess of the higher of the Minimum Purchase Amount and the
fair market value of the Financed Student Loans, the Indenture Trustee will not
consummate such sale. The Indenture Trustee may consult, and, at the direction
of the Seller, shall consult, with a financial advisor to determine if the fair
market value of the Financed Student Loans has been offered. The net proceeds of
any such sale will be applied in the order of priority set forth in Section
5.04(b). If the sale is not consummated in accordance with the foregoing, the
Indenture Trustee may, but shall not be under any obligation to, solicit bids to
purchase the Financed Student Loans on future Distribution Dates upon terms
similar to those described above.
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest (including, subject to
the limitations of Sections 2.07(d) and 8.02(c), any Noteholders'
Interest Index Carryover) on any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the
Issuer and the Indenture Trustee by the Noteholders of at least 25% of
the Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of Default
hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Indenture Trust Estate in an involuntary case
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Indenture
Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Indenture Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the
taking of action by the Issuer in furtherance of any of the foregoing.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee acting at the direction of the Noteholders of Notes
representing not less than a majority of the Outstanding Amount of the Notes may
declare all the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Noteholders of Notes representing a majority of the Outstanding Amount of the
Notes, by written notice to the Issuer and the Indenture Trustee, may rescind
and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE. (a) The Issuer covenants that if (i) default is made in the
payment of any interest (including, subject to the limitations of Sections
2.07(d) and 8.02(c), any Noteholders' Interest Index Carryover) on any Note when
the same becomes due and payable, and such default continues for a period of
five days, or (ii) default is made in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and payable,
the Issuer will, upon demand of the Indenture Trustee, pay to it, for the
benefit of the Noteholders, the whole amount then due and payable on such Notes
for principal and interest (and any Noteholders' Interest Index Carryover), with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest
(and any Noteholders' Interest Index Carryover), at the rate specified in
Section 2.07 and in addition thereto such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.04, in its discretion, and
shall, as directed by the Noteholders of the Notes representing not less than a
majority of the Outstanding Amount of the Notes, 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, or as so directed, to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Indenture Trust Estate, Proceedings under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest (including any Noteholders' Interest Index
Carryover) owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee, a standby trustee
or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Noteholders allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Indenture Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee and the Noteholders; and
(iv) sell the Indenture Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.01(i) or (ii), unless (A) the
Noteholders of 100% of the Outstanding Amount of the Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest or (C) the Indenture Trustee determines that the
Indenture Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Noteholders of 66-2/3% of the Outstanding Amount of the
Notes. In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07;
SECOND: to the Master Servicer, the Servicing Fee due on such
Distribution Date and all prior unpaid Servicing Fees;
THIRD: to the Administrator for amounts due under Section 3 of
the Administration Agreement;
FOURTH: to the Eligible Lender Trustee for amounts due under
Section 8.01 of the Trust Agreement;
FIFTH: to the Noteholders, the Noteholders' Interest Distribution
Amount ratably, without preference or priority of any kind, according
to the amounts payable on the Notes in respect of Noteholders'
Interest Distribution Amount;
SIXTH: to the Class A-1 Noteholders, the Noteholders' Principal
Distribution Amount, ratably, without preference or priority of any
kind, according to the amounts payable on the Class A-1 Notes for
principal; and then after the Class A-1 Notes have been paid in full,
to the Class A-2 Noteholders, the Noteholders' Principal Distribution
Amount, ratably, without preference or priority of any kind, according
to the amounts payable on the Class A-2 Notes for principal;
SEVENTH: to the Eligible Lender Trustee on behalf of the
Certificateholders, the Certificateholders' Interest Distribution
Amount, for distribution by the Eligible Lender Trustee pursuant to
the Trust Agreement, ratably, without preference or priority of any
kind, according to the amounts payable in respect of
Certificateholders' Interest Distribution Amount;
EIGHTH:, to the Eligible Lender Trustee on behalf of the
Certificateholders, the Certificateholder's Principal Distribution
Amount, for distribution by the Eligible Lender Trustee pursuant to
the Trust Agreement, ratably, without preference or priority of any
kind, according to the amounts payable in respect of the Certificate
Balance;
NINTH: to the Reserve Account, the amount, if any, necessary to
reinstate the balance of the Reserve Account to the Specified Reserve
Account Balance;
[TENTH: to the Master Servicer, the aggregate unpaid amount, if
any, of the Excess Servicing Fee;]
ELEVENTH: to the Noteholders, the aggregate unpaid amount of the
Noteholders' Interest Index Carryover, if any, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes in respect of Noteholders' Interest Index
Carryover;
TWELFTH: to the Eligible Lender Trustee on behalf of the
Certificateholders, the aggregate unpaid amount of the
Certificateholders' Interest Index Carryover, if any, for distribution
by the Eligible Lender trustee pursuant to the Trust Agreement
ratably, without preference or priority of any kind, according to the
amounts payable in respect of Certificateholders' Interest Index
Carryover; and
THIRTEENTH: to the Reserve Account, any remaining amounts after
application of clauses FIRST through TWELFTH above.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.05. OPTIONAL PRESERVATION OF THE FINANCED STUDENT LOANS. If the
Notes have been declared to be due and payable under Section 5.02 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Indenture Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest (including any Noteholders'
Interest Index Carryover) on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Indenture Trust Estate. In determining whether to maintain possession of
the Indenture Trust Estate, the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such purpose.
SECTION 5.06. LIMITATION OF SUITS. No Noteholder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Noteholders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it 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 the Notes;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the Outstanding Amount of the Notes, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST. Notwithstanding any other provisions in this Indenture, any Noteholder
shall have the right, which is absolute and unconditional, to receive payment of
the principal of and interest, if any, on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Noteholder.
SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the
Indenture Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default shall impair any such right or remedy or constitute a waiver of
any such Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11. CONTROL BY NOTEHOLDERS. The Noteholders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; PROVIDED that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction to
the Indenture Trustee to sell or liquidate the Indenture Trust Estate shall
be by the Noteholders of not less than 100% of the Outstanding Amount of
the Notes;
(iii) if the conditions set forth in Section 5.05 have been satisfied
and the Indenture Trustee elects to retain the Indenture Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Noteholders of less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Indenture Trust Estate shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
PROVIDED, HOWEVER, that, subject to Section 6.01, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12. WAIVER OF PAST DEFAULTS. Prior to the time a judgment or
decree for payment of money due has been obtained as described in Section 5.02,
the Noteholders of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default and its consequences except a Default (a) in
payment when due of principal of or interest (including, subject to the
limitations of Sections 2.07(d) and 8.02(c), any Noteholders' Interest Index
Carryover) on any of the Notes or (b) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of each
Noteholder. In the case of any such waiver, the Issuer, the Indenture Trustee
and the Noteholders shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto.
SECTION 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Noteholder by such Noteholder's acceptance of any Note shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest (including any
Noteholders' Interest Index Carryover) on any Note on or after the respective
due dates expressed in such Note and in this Indenture.
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15. ACTION ON NOTES. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Indenture Trust Estate or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
SECTION 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller, the Administrator and the Master Servicer, as applicable, of each
of their obligations to the Issuer under or in connection with the Sale
Agreement in the case of the Seller, the Master Servicing Agreement in the case
of the Master Servicer and the Master Servicing Agreement and the Administration
Agreement in the case of the Administrator in accordance with the terms thereof,
and to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale Agreement, the
Master Servicing Agreement and the Administration Agreement to the extent and in
the manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Seller, the Administrator or the Master
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Seller, the Administrator or
the Master Servicer of each of their obligations under the Sale Agreement,
Master Servicing Agreement and the Administration Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Noteholders of
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Administrator or the Master Servicer under or in connection with the Sale
Agreement, Master Servicing Agreement and the Administration Agreement,
including the right or power to take any action to compel or secure performance
or observance by the Seller, the Administrator or the Master Servicer of each of
their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale Agreement,
Master Servicing Agreement and the Administration Agreement and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; PROVIDED, HOWEVER, that the Indenture
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Master Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity satisfactory to it against any loss,
liability or expense is not reasonably assured to it.
(h) The Indenture Trustee, in such capacity, shall have no obligation to
administer, service or collect the Financed Student Loans or to maintain,
monitor or otherwise supervise the administration, servicing or collection of
the Financed Student Loans.
(i) In the event that the Indenture Trustee is the Paying Agent or the Note
Registrar, the rights and protections afforded to the Indenture Trustee pursuant
to this Indenture shall also be afforded to the Indenture Trustee in its
capacity as Paying Agent or Note Registrar.
(j) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE. (a) The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Indenture Trustee need not investigate any
fact or matter stated in such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an 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 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 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.05. NOTICE OF DEFAULTS. If a Default or an Event of Default
occurs and is continuing and if it is either actually known or written notice of
the existence thereof has been delivered to a Responsible Officer of the
Indenture Trustee, the Indenture Trustee shall mail to each Noteholder notice of
the Default within 90 days after it occurs. Except in the case of a Default in
payment of principal of or interest (including any Noteholders' Interest Index
Carryover) on any Note, 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. Except as provided in
the first sentence of this Section, in no event shall the Indenture Trustee be
deemed to have knowledge of a Default or an Event of Default.
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS. The Indenture
Trustee shall deliver to each Noteholder (and to each Person who was a
Noteholder at any time during the applicable calendar year) such information as
may be required to enable such holder to prepare its Federal and state income
tax returns. Within 60 days after each December 31 beginning with the December
31 following the date of this Indenture, the Indenture Trustee shall mail to
each Noteholder a brief report as of such December 31 that complies with TIA
section 313(a), if required by said section. The Indenture Trustee shall also
comply with TIA section 313(b). A copy of each such report required pursuant to
TIA sections 313(a) or (b) shall, at the time of such transmission to
Noteholders, be filed by the Indenture Trustee with the Commission and with each
securities exchange, if any, upon which the Notes are listed, provided that the
Issuer has previously notified the Indenture Trustee of such listing.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall cause the
Administrator to pay to the Indenture Trustee reasonable compensation for its
services (including the reasonable compensation of its counsel and agents) in
accordance with a separate agreement between the Administrator and the Indenture
Trustee and shall cause the Administrator to reimburse the Indenture Trustee for
all reasonable out-of-pocket expenses incurred or made by it as provided in such
separate agreement. The Indenture Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Issuer shall cause
the Administrator to indemnify the Indenture Trustee (which, for the purposes of
this Section 6.07, shall include its directors, officers, employees and agents)
against any and all loss, liability or expense of defending against any claim or
liability (including attorneys' fees and expenses) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder and under 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
cause the Administrator to defend the claim and the Administrator shall be
liable for the legal fees and expenses of the Indenture Trustee after it has
assumed such defense; PROVIDED, HOWEVER, that, in the event that there may be a
conflict between the positions of the Indenture Trustee and the Administrator in
conducting the defense of such claim, the Indenture Trustee shall be entitled to
separate counsel the fees and expenses of which shall be paid by the
Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee as may be attributable to its own willful
misconduct, negligence or bad faith. This indemnity shall survive the
termination of this Indenture or the Trust and the resignation or removal of the
Indenture Trustee.
When the Indenture Trustee incurs expenses after the occurrence of a
Default specified in Section 5.01(iv) or (v) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or similar law.
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer. The Noteholders of a majority in
Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying
the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event occurs with respect to the Indenture Trustee;
(iii) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Noteholders of a majority in Outstanding Amount of
the Notes may petition any court of competent jurisdiction for the appointment
of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Administrator's obligations under Section 6.07
shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Indenture Trust Estate, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Indenture Trust Estate, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Indenture Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee shall at
all times satisfy the requirements of TIA section 310(a), and shall be subject
to supervision or examination by Federal or State authority. 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 its equivalent) or better by the Rating
Agencies. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section 6.11, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.11, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article VI.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Noteholders contained in the most
recent list furnished to the Indenture Trustee as provided in Section 7.01 and
the names and addresses of Noteholders received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA section 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by a Noteholder to
receive a copy of the current list of Noteholders (whether or not made pursuant
to TIA section 312(b)), the Indenture Trustee shall promptly notify the
Administrator thereof by providing to the Administrator a copy of such request
and a copy of the list of Noteholders produced in response thereto.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA section 312(c).
(d) The Indenture Trustee shall furnish to the Noteholders promptly upon
receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Indenture Trustee under the Basic Documents.
SECTION 7.03. REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders as described in TIA section 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) as may be required by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.04. PROVISIONS OF THIS ARTICLE SUPERSEDED BY TRUST INDENTURE ACT.
The Provisions of this Article VII are all intended to facilitate compliance
with the requirements of the TIA as in effect on the date hereof, and shall be
deemed superseded by any modifications or changes to such requirements (to
expand such requirements to eliminate such requirements or otherwise) effected
by amendment to the TIA, by regulation, by rule or by judicial or administrative
decision. The provisions of this Article VII shall not at any time impose upon
any Person obligated under this Article VII any greater reporting obligation
with respect to the matters covered by this Article VII than the reporting
obligation with respect to such matters imposed upon such Person by the TIA as
in effect with respect to such time.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it on behalf of Noteholders
pursuant to the Master Servicing Agreement as provided in this Indenture. Except
as otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Indenture Trust Estate, the Indenture Trustee may take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.02. TRUST ACCOUNTS. (a) On or prior to the Closing Date, the
Issuer shall cause the Administrator to establish and maintain, in the name of
the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, the Trust Accounts as provided in Section 4.01 of the Master
Servicing Agreement.
(b) On or before the Business Day preceding each Distribution Date, all
Available Funds with respect to the preceding Collection Period will be
deposited in the Collection Account as provided in Section 4.02 of the Master
Servicing Agreement. On or before each Distribution Date, the Noteholders'
Distribution Amount and any Noteholders' Interest Index Carryover with respect
to the preceding Collection Period will be distributed from the Trust Accounts
to the Indenture Trustee (or any other Paying Agent) on behalf of the
Noteholders as provided in Sections 4.05 and 4.06 of the Master 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
pursuant to paragraph (b) above to Noteholders in respect of the Notes to the
extent of amounts due and unpaid on the Notes for principal, interest and any
Noteholders' Interest Index Carryover in the following amounts and in the order
of priority provided under Section 4.05(c) of the Master Servicing Agreement
(except as otherwise provided in Section 5.04(b)).
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS. (a) So long as no
Default shall have occurred and be continuing, all or a portion of the funds in
the Trust Accounts shall be invested in Eligible Investments and reinvested by
the Indenture Trustee upon Issuer Order, subject to the provisions of Section
4.01(b) of the Master Servicing Agreement. All income or other gain from
investments of moneys deposited in the Trust Accounts shall be deposited by the
Indenture Trustee in the Collection Account, and any loss resulting from such
investments shall be charged to such Trust Account. The Issuer will not direct
the Indenture Trustee to make any investment of any funds or to sell any
investment held in any of the Trust Accounts unless the security interest
granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to the Indenture Trustee by 10:00
a.m. Eastern Time (or such other time as may be agreed by the Issuer and
Indenture Trustee or such Person maintaining the Trust Accounts) on any Business
Day; or (ii) a Default shall have occurred and be continuing with respect to the
Notes but the Notes shall not have been declared due and payable pursuant to
Section 5.02, or, if such Notes shall have been declared due and payable
following an Event of Default, amounts collected or receivable from the
Indenture Trust Estate are being applied in accordance with Section 5.05 as if
there had not been such a declaration; then the Indenture Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts in
one or more Eligible Investments.
SECTION 8.04. RELEASE OF INDENTURE TRUST ESTATE. (a) Subject to the payment
of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may,
and when required by the provisions of this Indenture shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Indenture Trust Estate that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate of the Issuer, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance with
TIA sections 314(c) and 314(d)(1) meeting the applicable requirements of Section
10.01.
(c) Each Noteholder, by the acceptance of a Note, acknowledges that from
time to time the Indenture Trustee may release the lien of this Indenture on any
Financed Student Loans to be sold to the Seller or Master Servicer and as to
which the Seller or Master Servicer will simultaneously deposit the aggregate
Purchase Amounts thereof into the Collection Account in accordance with, and
subject to the terms and conditions of, Section 4.04 of the Master Servicing
Agreement, and each Noteholder consents to such release.
SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, except in connection with any
action contemplated by Section 8.04(c), as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; PROVIDED, HOWEVER, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Indenture Trust Estate. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. (a)
Without the consent of any Noteholders but with prior notice to the Rating
Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not materially adversely affect the interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with prior
notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
upon the satisfaction of the Rating Agency Condition and with the consent of the
Noteholders of not less than a majority of the Outstanding Amount of the Notes,
by Act of such Noteholders delivered to the Issuer and the Indenture Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Noteholders under this Indenture; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the Noteholder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of principal of or
interest (including any Noteholders' Interest Index Carryover) on any Note,
or reduce the principal amount thereof 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 (including any Noteholders' Interest Index
Carryover) on the Notes, or change any place of payment where, or the coin
or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of
this Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes
on or after the respective due dates thereof;
(ii) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Noteholders of which is required for any such supplemental
indenture, or the consent of the Noteholders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Indenture Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Noteholder of each
Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest
(including any Noteholders' Interest Index Carryover) or principal due on
any Note on any Distribution Date (including the calculation of any of the
individual components of such calculation); or
(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 expressly 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.
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 Issuer 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, or a copy, of
such supplemental indenture. Any failure of the Issuer to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Noteholders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determines, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an 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 each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) Subject to 10.01(c) below:
(i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 10.01(a) or elsewhere in this Indenture, 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 deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an 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 deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to the
Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth in
the certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the
related Officer's Certificate is less than $25,000 or less than one percent
of the Outstanding Amount of the Notes.
(iii) Other than any property released as contemplated by clause (v)
below, whenever any property or securities are to be released from the lien
of this Indenture, the Issuer shall also furnish to the Indenture Trustee
an 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.
(iv) 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 (iii)
above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than property as
contemplated by clause (v) below, or securities released from the lien of
this Indenture since the commencement of the then-current calendar year, as
set forth in the certificates required by clause (iii) above and this
clause (iv), equals 10% or more of the Outstanding Amount of the Notes, but
such certificate need not be furnished in the case of any release of
property or securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less than one percent
of the then Outstanding Amount of the Notes.
(c) The provisions of Section 10.01(b) are all intended to facilitate
compliance with the requirements of the TIA as in effect on the date hereof, and
shall be deemed superseded by any modifications or changes to such requirements
(to expand such requirements, to eliminate such requirements or otherwise)
effected by amendment to the TIA, by regulation, by rule or by judicial or
administrative decision. The provisions of Section 10.01(b) shall not at any
time impose upon any Person obligated under this Section any greater reporting
obligations with respect to the matters covered by Section 10.01(b) than the
reporting obligation with respect to such matters imposed upon such Person by
the TIA as in effect with respect to such time.
SECTION 10.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Master
Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Master Servicer, the Seller, the Issuer or the Administrator, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 10.03. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the 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 10.04. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing (which may include facsimile) and if such request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders is to be
made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to the Issuer addressed to: First Union Student Loan Trust
1997-1, in care of The First National Bank of Chicago, as Eligible Lender
Trustee, One First National Plaza, Suite 0126, Chicago, Illinois 60670,
Attention: Corporate Trust Administration; with a copy to the Administrator,
First Union National Bank, One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288, Attention: [----------------] 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.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Eligible Lender Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in the
case of Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007 and (ii) in
the case Fitch at the following address: One State Street Plaza, New York, New
York 10004 or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 10.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default.
SECTION 10.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Noteholder providing for a method of payment,
or notice by the Indenture Trustee or any Paying Agent to such Noteholder, that
is different from the methods provided for in this Indenture for such payments
or notices. The Issuer will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 10.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 10.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 10.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind the successors, co-trustees and agents (excluding any legal
representatives or accountants) of the Indenture Trustee.
SECTION 10.10. 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 10.11. 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 10.12. 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 10.13. GOVERNING LAW. This Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.14. 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 10.15. 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
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 10.16. TRUST OBLIGATIONS. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Seller, the
Administrator, the Master Servicer, the Eligible Lender Trustee or the Indenture
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Seller, the
Administrator, the Master Servicer, the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity or (ii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Seller, the Administrator,
the Master Servicer, the Indenture Trustee or the Eligible Lender Trustee in its
individual capacity, any holder or owner of a beneficial interest in the Issuer,
the Eligible Lender Trustee or the Indenture Trustee or of any successor or
assign of the Seller, the Administrator, the Master Servicer, the Indenture
Trustee or the Eligible Lender Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Eligible Lender Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the
Eligible Lender Trustee shall be subject to, and entitled to the benefits of,
the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 10.17. NO PETITION. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they shall not, prior to the date which is one year and one day after the
termination of this Indenture, institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Basic Documents.
SECTION 10.18. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information obtained from such examination or inspection except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
<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.
FIRST UNION STUDENT LOAN TRUST 1997-1
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual capacity
but solely as Eligible Lender Trustee,
By:--------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By:--------------------------------------
Name:
Title:
Acknowledged and accepted as to the
Granting Clause as of the day and
year first above written:
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but
solely as Eligible Lender Trustee,
By:---------------------------------
Name:
Title:
<PAGE>
APPENDIX A
DEFINITIONS AND USAGE
<PAGE>
SCHEDULE A
SCHEDULE OF FINANCED STUDENT LOANS
<PAGE>
SCHEDULE B
SCHEDULE OF FINANCED STUDENT LOAN FILES
<PAGE>
EXHIBIT A
[FORM OF CLASS A-1 NOTE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer (as
defined below) or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY.
REGISTERED CUSIP NO.
$---------- /1
- -----------------
1 Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
No. R-
FIRST UNION STUDENT LOAN TRUST 1997-1
FLOATING RATE CLASS A-1 ASSET BACKED NOTES
First Union Student Loan Trust 1997-1, a trust organized and existing under
the laws of the State of Delaware (herein referred to as the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of [----] DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $[INSERT INITIAL PRINCIPAL AMOUNT OF THIS NOTE] and the denominator of
which is [$-------] by (ii) the aggregate amount, if any, payable to Noteholders
on such Distribution Date in respect of principal on the Notes pursuant to
Section 3.01 of the Indenture, dated as of June 1, 1997, between the Issuer and
Bankers Trust Company, a New York banking corporation, as indenture trustee (the
"Indenture Trustee") (capitalized terms used but not defined herein are defined
in Appendix A to the Indenture, which also contains rules as to usage that shall
be applicable herein); PROVIDED, HOWEVER, that the entire unpaid principal
amount of this Note shall be due and payable on the --------- 20-- Distribution
Date (the "Class A-1 Final Maturity Date").
The Issuer will pay interest on this Note at the rate per annum equal to
the Class A-1 Rate (as defined on the reverse hereof), on each Distribution Date
until the principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date), subject to certain limitations contained in Section 3.01 of
the Indenture. Interest on this Note will accrue for each Distribution Date from
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from the
Closing Date. Interest will be computed on the basis of the actual number of
days elapsed in each Interest Period divided by 365 (or 366 in the case of a
leap year). Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
FIRST UNION STUDENT LOAN TRUST 1997-1
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee under the Trust
Agreement,
By:
-------------------------------------------
Authorized Signatory
Date: ------- --, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but solely
as Indenture Trustee,
By:
-------------------------------------------
Authorized Signatory
Date: ------- --, 1997
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Class A-1 Asset Backed Notes (herein called the
"Notes"), all issued under the Indenture, to which Indenture and all supplements
or amendments thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof until the principal balance of the Notes are
reduced to zero. "Distribution Date" means [----------] day of each [of] March,
June, September and December (each, a "Distribution Date"); [or, if any such
date is not a Business Day, the next succeeding Business Day,] commencing
September [ ], 1997.
As described on the face hereof, the entire unpaid principal amount of this
Note shall be due and payable on the Class A-1 Final Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (i) an Event of Default shall have
occurred and be continuing and (ii) the Indenture Trustee or the Noteholders
representing not less than a majority of the Outstanding Amount of the Notes
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Class A-1 Noteholders entitled thereto.
Interest on the Notes will be payable on each Distribution Date on the
principal amount outstanding of the Notes until the principal amount thereof is
paid in full, at a rate per annum equal to the Class A-1 Rate. The "Class A-1
Rate" for each Interest Period will be equal to the lesser of (a) the T-Bill
Rate for such Interest Period (determined as set forth under "-- Determination
of the T-Bill Rate") plus ---% and (b) the Student Loan Rate for such Interest
Period. The "Student Loan Rate" for any Interest Period will equal the product
of (a) the quotient obtained by dividing (i) 365 (or 366 in a leap year) by (ii)
the actual number of days elapsed in such Interest Period and (b) the percentage
equivalent of a fraction, (i) the numerator of which is equal to Expected
Interest Collections for the Collection Period relating to such Interest Period
less the Servicing Fees and the Administration Fee payable on the related
Distribution Date and any Servicing Fees paid on the two preceding monthly
Servicing Payment Dates during the related Collection Period and (ii) the
denominator of which is the Pool Balance.
Pursuant to Section 3.04 of the Master Servicing Agreement, the
Administrator shall determine the T-Bill Rate for purposes of calculating the
Class A-1 Rate for each given Interest Period. The "T-Bill Rate" means, on any
day, the weighted average per annum discount rate (expressed on a bond
equivalent basis and applied on a daily basis) for 91-day Treasury bills sold at
the most recent 91-day Treasury bill auction prior to such date, as reported by
the U.S. Department of the Treasury. In the event that the results of the
auctions of 91-day Treasury bills cease to be reported as provided above, or
that no such auction is held in a particular week, then the T-Bill Rate in
effect as a result of the last such publication or report will remain in effect
until such time, if any, as the results of auctions of 91-day Treasury bills
shall again be reported or such an auction is held, as the case may be. The
T-Bill Rate will be subject to a Lock-In Period of six business days.
Any Noteholders' Interest Index Carryover that may exist on any
Distribution Date attributable to the Notes shall be payable to the Noteholders
on that Distribution Date and any succeeding Distribution Dates solely out of
the funds available and required to be applied thereto pursuant to the Master
Servicing Agreement.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register on the Record Date, except that with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency, unless Definitive Notes have been issued (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment, and the mailing of such check shall
constitute payment of the amount thereof regardless of whether such check is
returned undelivered. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Noteholders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Noteholder hereof as of the Record Date preceding such Distribution Date
by notice mailed no later than five days prior to such Distribution Date and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's Corporate Trust Office or at
the office of the Indenture Trustee's agent appointed for such purposes located
in the Borough of Manhattan, The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in Securities Transfer Agent's Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP
(all in accordance with the Exchange Act), and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee or the Eligible Lender Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee, except as any such Person may have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
other Basic Documents.
Each transferee of this Note shall be required to represent (or, the case
of a transferee of a beneficial interest in a Book-Entry Note, shall be deemed
to represent) (a) that it is not a Benefit Plan Investor and is not using the
assets of a Benefit Plan Investor to acquire this Note or (b) if such transfere
is a Benefit Plan Investor or a Person investing the assets of a Benefit Plan
Investor, that the use of the assets of such Benefit Plan Investor to acquire
this Note does not and will not constitute or result in a non-exempt prohibited
transaction in violation of Section 406 of ERISA, Section 4975 of the Code or
Similar Law. Any transfer of this Note or any beneficial interest herein in
violation of the foregoing restrictions shall be null and void and shall vest no
rights in the transferee.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Noteholders representing a majority of the
Outstanding Amount of all Notes at the time outstanding. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of all the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
[New York], without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither The First National Bank of Chicago, in
its individual capacity, Bankers Trust Company, in its individual capacity, any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture; it being expressly understood that said covenants,
obligations and indemnifications have been made by the Eligible Lender Trustee
for the sole purposes of binding the interests of the Eligible Lender Trustee in
the assets of the Issuer. The Noteholder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Noteholder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
PROVIDED, HOWEVER, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- ------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto -------------------------------
- -----------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ----------------------, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: -------------
-------------------------------- */
Signature Guaranteed:
-------------------------------- */
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
[FORM OF CLASS A-2 NOTE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer (as
defined below) or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY.
REGISTERED CUSIP NO.
$---------- /2
- -----------------
2 Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
No. R-
FIRST UNION STUDENT LOAN TRUST 1997-1
FLOATING RATE CLASS A-2 ASSET BACKED NOTES
First Union Student Loan Trust 1997-1, a trust organized and existing under
the laws of the State of Delaware (herein referred to as the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of [---] DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $[INSERT INITIAL PRINCIPAL AMOUNT OF THIS NOTE] and the denominator of
which is [$----------] by (ii) the aggregate amount, if any, payable to
Noteholders on such Distribution Date in respect of principal on the Notes
pursuant to Section 3.01 of the Indenture, dated as of June 1, 1997, between the
Issuer and Bankers Trust Company, a New York banking corporation, as indenture
trustee (the "Indenture Trustee") (capitalized terms used but not defined herein
are defined in Appendix A to the Indenture, which also contains rules as to
usage that shall be applicable herein); PROVIDED, HOWEVER, that the entire
unpaid principal amount of this Note shall be due and payable on the ---------
20-- Distribution Date (the "Class A-2 Final Maturity Date").
The Issuer will pay interest on this Note at the rate per annum equal to
the Class A-2 Rate (as defined on the reverse hereof), on each Distribution Date
until the principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date), subject to certain limitations contained in Section 3.01 of
the Indenture. Interest on this Note will accrue for each Distribution Date from
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from the
Closing Date. Interest will be computed on the basis of the actual number of
days elapsed in each Interest Period divided by 365 (or 366 in the case of a
leap year). Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
FIRST UNION STUDENT LOAN TRUST 1997-1
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee under the
Trust Agreement,
By:
-------------------------------------------
Authorized Signatory
Date: ------- --, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but solely
as Indenture Trustee,
By:
-------------------------------------------
Authorized Signatory
Date: ------- --, 1997
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Class A-2 Asset Backed Notes (herein called the
"Notes"), all issued under the Indenture, to which Indenture and all supplements
or amendments thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof; PROVIDED, HOWEVER, that no distributions in
respect of principal of the Class A-2 Notes will be made until the Class A-1
Notes have been paid in full. "Distribution Date" means [----------] day of each
[of] March, June, September and December (each, a "Distribution Date"); [or, if
any such date is not a Business Day, the next succeeding Business Day,]
commencing September [ ], 1997.
As described on the face hereof, the entire unpaid principal amount of this
Note shall be due and payable on the Class A-2 Final Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (i) an Event of Default shall have
occurred and be continuing and (ii) the Indenture Trustee or the Noteholders
representing not less than a majority of the Outstanding Amount of the Notes
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Class A-2 Noteholders entitled thereto.
Interest on the Notes will be payable on each Distribution Date on the
principal amount outstanding of the Notes until the principal amount thereof is
paid in full, at a rate per annum equal to the Class A-2 Rate. The "Class A-2
Rate" for each Interest Period will be equal to the lesser of the T-Bill Rate
for such Interest Period (determined as set forth under "-- Determination of the
T-Bill Rate") plus ---% and (b) the Student Loan Rate for such Interest Period.
The "Student Loan Rate" for any Interest Period will equal the product of (a)
the quotient obtained by dividing (i) 365 (or 366 in a leap year) by (ii) the
actual number of days elapsed in such Interest Period and (b) the percentage
equivalent of a fraction, (i) the numerator of which is equal to Expected
Interest Collections for the Collection Period relating to such Interest Period
less the Servicing Fees and the Administration Fee payable on the related
Distribution Date and any Servicing Fees paid on the two preceding monthly
Servicing Payment Dates during the related Collection Period and (ii) the
denominator of which is the Pool Balance.
Pursuant to Section 3.04 of the Master Servicing Agreement, the
Administrator shall determine the T-Bill Rate for purposes of calculating the
Class A-2 Rate for each given Interest Period. The "T-Bill Rate" means, on any
day, the weighted average per annum discount rate (expressed on a bond
equivalent basis and applied on a daily basis) for 91-day Treasury bills sold at
the most recent 91-day Treasury bill auction prior to such date, as reported by
the U.S. Department of the Treasury. In the event that the results of the
auctions of 91-day Treasury bills cease to be reported as provided above, or
that no such auction is held in a particular week, then the T-Bill Rate in
effect as a result of the last such publication or report will remain in effect
until such time, if any, as the results of auctions of 91-day Treasury bills
shall again be reported or such an auction is held, as the case may be. The
T-Bill Rate will be subject to a Lock-In Period of six business days.
Any Noteholders' Interest Index Carryover that may exist on any
Distribution Date attributable to the Notes shall be payable to the Noteholders
on that Distribution Date and any succeeding Distribution Dates solely out of
the funds available and required to be applied thereto pursuant to the Master
Servicing Agreement.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register on the Record Date, except that with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency, unless Definitive Notes have been issued (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment, and the mailing of such check shall
constitute payment of the amount thereof regardless of whether such check is
returned undelivered. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Noteholders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Noteholder hereof as of the Record Date preceding such Distribution Date
by notice mailed no later than five days prior to such Distribution Date and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's Corporate Trust Office or at
the office of the Indenture Trustee's agent appointed for such purposes located
in the Borough of Manhattan, The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in Securities Transfer Agent's Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP
(all in accordance with the Exchange Act), and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee or the Eligible Lender Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee, except as any such Person may have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
other Basic Documents.
Each transferee of this Note shall be required to represent (or, the case
of a transferee of a beneficial interest in a Book-Entry Note, shall be deemed
to represent) (a) that it is not a Benefit Plan Investor and is not using the
assets of a Benefit Plan Investor to acquire this Note or (b) if such transfere
is a Benefit Plan Investor or a Person investing the assets of a Benefit Plan
Investor, that the use of the assets of such Benefit Plan Investor to acquire
this Note does not and will not constitute or result in a non-exempt prohibited
transaction in violation of Section 406 of ERISA, Section 4975 of the Code or
Similar Law. Any transfer of this Note or any beneficial interest herein in
violation of the foregoing restrictions shall be null and void and shall vest no
rights in the transferee.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Noteholders representing a majority of the
Outstanding Amount of all Notes at the time outstanding. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of all the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
[New York], without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither The First National Bank of Chicago, in
its individual capacity, Bankers Trust Company, in its individual capacity, any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture; it being expressly understood that said covenants,
obligations and indemnifications have been made by the Eligible Lender Trustee
for the sole purposes of binding the interests of the Eligible Lender Trustee in
the assets of the Issuer. The Noteholder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Noteholder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
PROVIDED, HOWEVER, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- ------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto -------------------------------
- ---------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ----------------------, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: -------------
-------------------------------- */
Signature Guaranteed:
-------------------------------- */
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
APPENDIX A
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to any
instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings when
used in any instrument governed hereby and in any certificate or other document
made or delivered pursuant thereto unless otherwise defined therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of similar import
when used in an instrument refer to such instrument as a whole and not to any
particular provision or subdivision thereof; references in an instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(d) The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms and to the masculine as well as
to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below or in
any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
<PAGE>
Definitions
"91-DAY TREASURY BILLS" means direct obligations of the United States with
a maturity of thirteen weeks.
"ACT" has the meaning specified in Section 10.03(a) of the Indenture.
"ADJUSTED POOL BALANCE" means, for any Distribution Date, (a) if the Pool
Balance as of the last day of the related Collection Period is greater than 40%
of the Initial Pool Balance, the sum of such Pool Balance and the Specified
Reserve Account Balance for such Distribution Date, or (b) if the Pool Balance
as of the last day of the related Collection Period is less than or equal to 40%
of the Initial Pool Balance, such Pool Balance.
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as of
June 1, 1997, among the Issuer, the Indenture Trustee and the Administrator.
"ADMINISTRATION FEE" has the meaning specified in Section 3 of the
Administration Agreement.
"ADMINISTRATOR" means First Union National Bank, a national banking
association having its main office in Charlotte, North Carolina, in its capacity
as administrator of the Issuer and the Financed Student Loans.
"ADMINISTRATOR DEFAULT" has the meaning specified in Section 7.01(b) of the
Master Servicing Agreement.
"ADMINISTRATOR'S CERTIFICATE" means an Officer's Certificate of the
Administrator delivered pursuant to Section 3.08(b) and (c) of the Master
Servicing Agreement, substantially in the form of Exhibit C thereto.
"AFFILIATE" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AUCTION DISTRIBUTION DATE" means the Distribution Date immediately
following the Distribution Date on which the Pool Balance is less than or equal
to 10% of the Initial Pool Balance.
"AUTHORIZED OFFICER" means (i) with respect to the Issuer, any officer of
the Eligible Lender Trustee who is authorized to act for the Eligible Lender
Trustee in matters relating to the Issuer pursuant to the Basic Documents and
who is identified on the list of Authorized Officers delivered by the Eligible
Lender Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter), (ii) with respect to the
Administrator, any officer of the Administrator or any of its Affiliates who is
authorized to act for the Administrator in matters relating to itself or to the
Issuer and to be acted upon by the Administrator pursuant to the Basic Documents
and who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter), (iii) with respect to
the Seller, any officer of the Seller or any of its Affiliates who is authorized
to act for the Seller in matters relating to or to be acted upon by the Seller
pursuant to the Basic Documents and who is identified on the list of Authorized
Officers delivered by the Seller to the Indenture Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter) and
(iv) with respect to the Master Servicer, any officer of the Master Servicer who
is authorized to act for the Master Servicer in matters relating to or to be
acted upon by the Master Servicer pursuant to the Basic Documents and who is
identified on the list of Authorized Officers delivered by the Master Servicer
to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"AVAILABLE FUNDS" means, with respect to a Distribution Date or any Monthly
Servicing Payment Date, the sum of the following amounts received with respect
to the related Collection Period (or, in the case of a Monthly Servicing Payment
Date, the applicable portion thereof:
(a) all collections received by the Master Servicer on the Financed
Student Loans (including any Guarantee Payments received with respect
to the Financed Student Loans) but net of (x) amounts required by the
Higher Education Act to be paid to the Department or to be repaid to
borrowers (whether or not in the form of a principal reduction of the
applicable Financed Student Loan), with respect to the Financed
Student Loans for such Collection Period, including any Origination
Fee payable to the Department on Consolidation Loans disbursed after
October 1, 1993, and (y) any collections in respect of principal on
the Financed Student Loans applied by the Trust to repurchase
guaranteed loans from the Guarantors in accordance with the Guarantee
Agreements;
(b) any Interest Subsidy Payments and Special Allowance Payments received
by the Eligible Lender Trustee during such Collection Period with
respect to the Financed Student Loans;
(c) all Liquidation Proceeds from any Financed Student Loan which became
Liquidated Student Loans during such Collection Period in accordance
with the Master Servicer's customary servicing procedures, and all
recoveries in respect of Liquidated Student Loans which were written
off in prior Collection Periods;
(d) the aggregate Purchase Amounts received for those Financed Student
Loans repurchased by the Seller or purchased by the Master Servicer
under an obligation which arose during such Collection Period;
(e) the aggregate amounts, if any, received from the Seller or the Master
Servicer, as the case may be, as reimbursement of non-guaranteed
interest amounts, or lost Interest Subsidy Payments and Special
Allowance Payments, with respect to the Financed Student Loans
pursuant to the Sale Agreement or the Master Servicing Agreement,
respectively;
(f) amounts deposited by the Seller into the Collection Account in
connection with the making of Consolidation Loans; and
(g) Investment Earnings for such Distribution Date and any interest
remitted by the Administrator to the Collection Account prior to such
Distribution Date or Monthly Servicing Payment Date as described in
the preceding paragraph;
PROVIDED, HOWEVER, that Available Funds will exclude all payments and proceeds
(including Liquidation Proceeds) of any Financed Student Loans the Purchase
Amount of which has been included in Available Funds for a prior Monthly Payment
Date or Distribution Date; PROVIDED, FURTHER, that if with respect to any
Distribution Date there would not be sufficient funds, after application of
Available Funds (as defined above) and amounts available from the Reserve
Account, to pay any of the Trust Fees, then Available Funds for such
Distribution Date will include, in addition to the Available Funds (as defined
above), amounts on deposit in the Collection Account (or amounts held by the
Administrator, or which the Administrator reasonably estimates to be held by the
Administrator, for deposit into the Collection Account) on the Determination
Date which would have constituted Available Funds for the Distribution Date
succeeding such Distribution Date, up to the amount necessary to pay such items,
and the Available Funds for such succeeding Distribution Date will be adjusted
accordingly.
"BASIC DOCUMENTS" means the Trust Agreement, the Indenture, the Sale
Agreement, the Master Servicing Agreement, the Administration Agreement, the
Certificate Depository Agreement, the Note Depository Agreement, the Guarantee
Agreements and other documents and certificates delivered in connection with any
thereof.
"BENEFIT PLAN" has the meaning specified in Section 3.04 of the Trust
Agreement.
"BOOK-ENTRY CERTIFICATE" means a beneficial interest in the Certificates,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.11 of the Trust Agreement.
"BOOK-ENTRY NOTE" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10 of the Indenture.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in the City of New York, Chicago,
Illinois or Charlotte, North Carolina are authorized or obligated by law,
regulation or executive order to remain closed.
"CERTIFICATE" means a certificate evidencing the beneficial interest of a
Certificateholder in the Trust, substantially in the form of Exhibit A to the
Trust Agreement.
"CERTIFICATE BALANCE" equals, initially, the Initial Certificate Balance
and, thereafter, equals the Initial Certificate Balance reduced by all amounts
allocable to principal previously distributed to Certificateholders.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement dated as of the
Closing Date among the Trust, the Eligible Lender Trustee, the Administrator and
The Depository Trust Company, as the initial Clearing Agency, substantially in
the form of Exhibit B to the Trust Agreement.
"CERTIFICATE FINAL PAYMENT DATE" means the ______________ Distribution
Date.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"CERTIFICATE PAYING AGENT" means any paying agent or co-paying agent
appointed pursuant to Section 3.09 of the Trust Agreement, which shall initially
be the Eligible Lender Trustee.
"CERTIFICATE POOL FACTOR" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Certificate Balance divided
by the Initial Certificate Balance. The Certificate Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Certificate Pool Factor will
decline to reflect reductions in the Certificate Balance.
"CERTIFICATE RATE" means, with respect to any Interest Period, the interest
rate per annum (computed on the basis of the actual number of days elapsed in
such Interest Period over a year of 365 days (or 366 in the case of a leap
year)) equal to the lesser of (i) the daily weighted average of the T-Bill Rates
within such Interest Period plus __% and (ii) the Student Loan Rate for such
Interest Period.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" means the register
mentioned and the registrar appointed pursuant to Section 3.04 of the Trust
Agreement.
"CERTIFICATEHOLDER" means a Person in whose name a Certificate is
registered in the Certificate Register.
"CERTIFICATEHOLDERS' DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the Certificateholders' Interest Distribution Amount for such
Distribution Date plus, for each Distribution Date on and after which the Notes
have been paid in full, the Certificateholders' Principal Distribution Amount
for such Distribution Date.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the amount of interest accrued at the
Certificate Rate for the related Interest Period on the outstanding Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all distributions to Certificateholders in respect of the Certificate Balance on
such Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date) and (ii) the Certificateholders' Interest Shortfall for such
Distribution Date; PROVIDED, HOWEVER, that the Certificateholders' Interest
Distribution Amount will not include any Certificateholders' Interest Index
Carryover.
"CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER" means for any Distribution
Date on which the Certificate Rate is based on the Student Loan Rate, the excess
of (a) the amount of return on the Certificates that would have accrued in
respect of such Interest Period at the Certificate Rate without regard to the
Student Loan Rate over (b) the amount of return on the Certificates actually
accrued in respect of such Interest Period based on the Student Loan Rate,
together with the unpaid portion of any such excess from prior Distribution
Dates and any return accrued thereon calculated at the Certificate Rate without
regard to the Student Loan Rate; PROVIDED, HOWEVER, that on any Distribution
Date after the principal balance of the Certificates has been paid in full, the
Certificateholders' Interest Index Carryover shall be equal to zero.
"CERTIFICATEHOLDERS' INTEREST SHORTFALL" means, with respect to any
Distribution Date, the excess of (i) the Certificateholders' Interest
Distribution Amount on the preceding Distribution Date over (ii) the amount of
interest actually distributed to the Certificateholders on such preceding
Distribution Date, plus interest on the amount of such excess interest, to the
extent permitted by law, at the Certificate Rate from such preceding
Distribution Date to the current Distribution Date.
"CERTIFICATEHOLDERS' PERCENTAGE" means a fraction, expressed as a
percentage, the numerator of which is the principal amount of the Certificates
issued on the Closing Date and the denominator of which is the sum of the
principal amount of the Notes issued on the Closing Date and the principal
balance of the Certificates issued on the Closing Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, on each
Distribution Date, the excess of (i) the sum of (a) the Principal Distribution
Amount for such Distribution Date, (b) the Noteholders' Principal Shortfall as
of the close of the preceding Distribution Date and (c) the Certificateholders'
Principal Shortfall as of the close of the preceding Distribution Date over (ii)
the Noteholders' Principal Distribution Amount for such Distribution Date;
PROVIDED, HOWEVER, that the Certificateholders' Principal Distribution Amount
will in no event exceed the Certificate Balance. In addition, on the Certificate
Final Payment Date, the Certificate Balance to be distributed to the
Certificateholders will include the amount required to reduce the outstanding
Certificate Balance to zero.
"CERTIFICATEHOLDERS' PRINCIPAL SHORTFALL" means, as of the close of any
Distribution Date, the excess of (i) the Certificateholders' Principal
Distribution Amount on such Distribution Date over (ii) the amount of
distributions made with respect to the Certificate Balance on such Distribution
Date.
"CLASS A-1 FINAL MATURITY DATE" means the ______ 200_ Distribution Date, at
which time the outstanding principal amount of the Class A-1 Notes is payable in
full.
"CLASS A-1 NOTE" means Floating Rate Class A-1 Asset Backed Notes issued
pursuant to the Indenture, substantially in the form of Exhibit A hereto.
"CLASS A-1 RATE" means, with respect to each Interest Period, the interest
rate per annum (calculated on the basis of the actual number of days elapsed in
such Interest Period divided by 365 (or 366 in the case of a leap year)) equal
to the lesser of (a) the weighted average T-Bill Rate for such Interest Period
plus ___% and (b) the Student Loan Rate for such Interest Period.
"CLASS A-2 FINAL MATURITY DATE" means the ______ 200_ Distribution Date, at
which time the outstanding principal amount of the Class A-2 Notes is payable in
full.
"CLASS A-2 NOTE" means Floating Rate Class A-2 Asset Backed Notes issued
pursuant to the Indenture, substantially in the form of Exhibit B hereto.
"CLASS A-2 RATE" means, with respect to each Interest Period, the interest
rate per annum (calculated on the basis of the actual number of days elapsed in
such Interest Period divided by 365 (or 366 in the case of a leap year)) equal
to the lesser of (a) the weighted average T-Bill Rate for such Interest Period
plus ___% and (b) the Student Loan Rate for such Interest Period.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"CLOSING DATE" means June ____, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of the
Indenture.
"COLLECTION ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 4.01 of the Master Servicing Agreement.
"COLLECTION PERIOD" means each period of three calendar months from and
including the date next following the end of the preceding Collection Period
(or, with respect to the first Collection Period, the period beginning on the
Cutoff Date and ending on August 31, 1997).
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATION LOAN" means a loan made to an eligible borrower that
represents the refinancing of federal student loans of such borrower and his or
her spouse in accordance with the applicable terms and conditions of the Higher
Education Act.
"CORPORATE TRUST OFFICE" means (i) with respect to the Indenture Trustee,
the principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be administered, which office at the Closing
Date is located at Four Albany Street, New York, New York 10006; Attention:
Corporate Trust and Agency Group; Telephone: (212) 250-6137; Telecopy: (212)
250-6439, or at such other address as the Indenture Trustee may designate from
time to time by notice to the Noteholders and the Seller, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and the Seller) and
(ii) with respect to the Eligible Lender Trustee, the principal corporate trust
office of the Eligible Lender Trustee located at One First National Plaza, Suite
0126, Chicago, Illinois 60670; Attention: Corporate Trust Administration;
Telecopy: (312) 407-1708, or at such other address as the Eligible Lender
Trustee may designate by notice to the Certificateholders and the Seller, or the
principal corporate trust office of any successor Eligible Lender Trustee (the
address of which the successor Eligible Lender Trustee will notify the
Certificateholders and the Seller).
"CSLF" means the Connecticut Student Loan Foundation, an agency of the
State of Connecticut.
"CUTOFF DATE" means June 1, 1997.
"DEFAULT" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"DEFINITIVE CERTIFICATES" has the meaning specified in Section 3.11 of the
Trust Agreement.
"DEFINITIVE NOTES" has the meaning specified in Section 2.10 of the
Indenture.
"DELIVERY" when used with respect to Trust Account Property means: (a) with
respect to bankers' acceptances, commercial paper, negotiable certificates of
deposit and other obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the UCC and are susceptible of physical delivery,
transfer thereof to the Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its nominee or custodian endorsed
to, or registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313) of the UCC) and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Indenture Trustee or its
nominee or custodian, or (ii) by delivery thereof to a "clearing corporation"
(as defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or a
"custodian bank" (as defined in Section 8-102(4) of the UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the Indenture
Trustee or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any event, any
such Physical Property in registered form shall be in the name of the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof; (b) with respect to any securities issued by the
U.S. Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
Trust Account Property to an appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or custodian of
the purchase by the Indenture Trustee or its nominee or custodian of such
book-entry securities; the making by such financial intermediary of entries in
its books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof; and (c) with respect to any item of Trust Account
Property that is an uncertificated security under Article 8 of the UCC and that
is not governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Indenture
Trustee or its nominee or custodian of such uncertificated security, the making
by such financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Indenture Trustee or its
nominee or custodian.
"DEPARTMENT" means the United States Department of Education, an agency of
the Federal government.
"DEPOSITOR" means the Seller in its capacity as Depositor under the Trust
Agreement.
"DETERMINATION DATE" means, with respect to any Monthly Servicing Payment
Date or Distribution Date, as the case may be, the third Business Day preceding
such Monthly Servicing Payment Date or Distribution Date.
"DISTRIBUTION DATE" means, with respect to each Collection Period, the [__]
day of each of March, June, September and December, [or, if such day is not a
Business Day, the immediately following Business Day], commencing on September
[__], 1997.
"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.
"ELIGIBLE INSTITUTION" means a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), (i) which has a
long-term unsecured debt rating of investment grade and/or a short-term
unsecured debt rating in the highest investment rating category, each as
determined by at least two nationally recognized rating agencies and (ii) whose
deposits are insured by the FDIC. If so qualified, the Eligible Lender Trustee
or the Indenture Trustee may be considered an Eligible Institution.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of
the United States of America or any State (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities (including
depository receipts issued by any such institution or trust company as
custodian with respect to any obligation referred to in clause (a)
above or portion of such obligation for the benefit of the holders of
such depository receipts); PROVIDED, HOWEVER, that at the time of the
investment or contractual commitment to invest therein (which shall be
deemed to be made again each time funds are reinvested following each
Monthly Servicing Payment Date or Distribution Date, as the case may
be), the commercial paper or other short-term senior unsecured debt
obligations (other than such obligations the rating of which is based
on the credit of a Person other than such depository institution or
trust company) thereof shall have a credit rating from both of the
Rating Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or contractual
commitment to invest therein, a rating from both of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds or common trust funds having a
rating from both of the Rating Agencies in the highest investment
category granted thereby (including funds for which the Indenture
Trustee, the Administrator or the Eligible Lender Trustee or any of
their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America,
in either case entered into with (i) a depository institution or trust
company (acting as principal) described in clause (b) above; and
(g) any other investment permitted by each of the Rating Agencies as set
forth in writing delivered to the Indenture Trustee.
"ELIGIBLE LENDER TRUSTEE" means The First National Bank of Chicago, a
national banking association, not in its individual capacity but solely as
Eligible Lender Trustee under the Trust Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01 of the
Indenture.
"EXCESS DISTRIBUTION CERTIFICATE" means the certificate issued by the Trust
representing excess amounts distributed to the Seller in accordance with the
Sale Agreement, substantially in the form of Exhibit ___ to the Trust Agreement.
"EXCESS SERVICING FEE" has the meaning specified in Schedule [C] to the
[Master Servicing Agreement].
"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 or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"EXPECTED INTEREST COLLECTIONS" means, with respect to any month in a
Collection Period, the sum of (i) the amount of interest accrued, net of amounts
required by the Higher Education Act to be paid to the Department or to be
repaid to borrowers, with respect to the Financed Student Loans for such month
(whether or not such interest is actually paid), (ii) all Interest Subsidy
Payments and Special Allowance Payments expected to be received by the Eligible
Lender Trustee for such month (whether or not actually received) with respect to
the Financed Student Loans and (iii) Investment Earnings for such month.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
taxes, claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Eligible Lender Trustee or any of its officers, directors or agents
in any way relating to or arising out of the Trust Agreement, the other Basic
Documents, the Trust Estate, the administration of the Trust Estate or the
action or inaction of the Eligible Lender Trustee under the Trust Agreement or
the other Basic Documents.
"FDIC" means the Federal Deposit Insurance Corporation.
"FINANCED STUDENT LOAN" means any student loan that is guaranteed as to the
payment of principal and interest by a Guarantor and reinsured by the Department
and set forth on Schedule A to the Sale Agreement and the Indenture (which
Schedule may be in the form of microfiche).
"FINANCED STUDENT LOAN FILES" means the documents specified in Section 2.01
of the Master Servicing Agreement.
"FITCH" means Fitch Investors Services, L.P.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"GUARANTEE AGREEMENTS" means (i) in the case of PHEAA, the Lender Agreement
and the Lender Participation Agreement for Consolidation Loans, in each case
dated as of June ____, 1997, between PHEAA and the Eligible Lender Trustee on
behalf of the Issuer, (ii) in the case of NJHEAA, the Guaranty Loan Agreement,
dated as of June ___, 1997, between NJHEAA and the Eligible Lender Trustee on
behalf of the Issuer, (iii) in the case of CSLF, the Lender Agreement, dated as
of June ____, 1997, between CSLF and the Eligible Lender Trustee on behalf of
the Issuer, (iv) in the case of NYSHESC, the Loan Guarantee Agreement, dated as
of June ___, 1997, between NYSHESC and the Eligible Lender Trustee on behalf of
the Issuer and (v) in the case of USAF, the Agreement to Guarantee Loans, dated
as of June ___, 1997, between USAF and the Eligible Lender Trustee on behalf of
the Issuer.
"GUARANTEE PAYMENT" means any payment made by a Guarantor pursuant to a
Guarantee Agreement in respect of a Financed Student Loan.
"GUARANTORS" means PHEAA, NJHEAA, CSLF, NYSHESC and USAF.
"HIGHER EDUCATION ACT" means the Higher Education Act of 1965, as amended,
together with any rules, regulations and interpretations thereunder.
"INDENTURE" means the Indenture dated as of June 1, 1997, between the
Issuer and the Indenture Trustee.
"INDENTURE TRUST ESTATE" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"INDENTURE TRUSTEE" means Bankers Trust Corporation, a New York banking
corporation, not in its individual capacity but solely as Indenture Trustee
under the Indenture.
"INDEPENDENT" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
"INITIAL CERTIFICATE BALANCE" means $__________.
"INITIAL POOL BALANCE" means the Pool Balance as of the Cutoff Date, which
is $______________.
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"INTEREST COLLECTIONS" shall have the meaning specified in Section 4.03(a)
of the Master Servicing Agreement.
"INTEREST PERIOD" means, with respect to a Distribution Date, the period
from and including the Closing Date or the most recent Distribution Date on
which interest on the Notes or the Certificates, as the case may be, has been
distributed, to but excluding the current Distribution Date.
"INTEREST SUBSIDY PAYMENTS" means payments, designated as such, consisting
of interest subsidies by the Department 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 Monthly Payment Date or
Distribution Date, the investment earnings (net of losses and investment
expenses) on amounts on deposit in the Trust Accounts.
"ISSUER" means First Union Student Loan Trust 1997-1 until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained in the Indenture and required by the TIA, each other obligor
on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens and any other liens, if any, which
attach to the respective Financed Student Loan by operation of law as a result
of any act or omission by the related Obligor.
"LIQUIDATED STUDENT LOAN" means any defaulted Financed Student Loan
liquidated by the Master Servicer.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated Student Loan,
the moneys collected in respect thereof from whatever source, other than
Recoveries, net of expenses incurred by the Master Servicer in connection with
such liquidation and any amounts required by law to be remitted to the borrower
on such Liquidated Student Loan.
"LOCK-IN PERIOD" means the period of days preceding any Distribution Date
during which each Note Interest Rate or Certificate Rate, as applicable, in
effect on the first day of such period shall remain in effect until the end of
the Interest Period related to such Distribution Date.
"MASTER SERVICER" means First Union National Bank, a national banking
association having its main office in Charlotte, North Carolina, in its capacity
as Master Servicer on behalf of the Trust.
"MASTER SERVICER DEFAULT" means an event specified in Section 7.01(a) of
the Master Servicing Agreement.
"MASTER SERVICER'S REPORT" means any report of the Master Servicer
delivered pursuant to Section 3.08(a) of the Master Servicing Agreement,
substantially in the form acceptable to the Administrator.
"MASTER SERVICING AGREEMENT" means the Master Servicing Agreement dated as
of June 1, 1997, among the Issuer, the Master Servicer, the Administrator and
the Eligible Lender Trustee.
"MINIMUM PURCHASE AMOUNT" means an amount that would be sufficient to (i)
reduce the outstanding principal amount of each class of Notes then outstanding
on such Distribution Date to zero, (ii) pay to Noteholders the Noteholders'
Interest Distribution Amount payable on such Distribution Date, (iii) reduce the
Certificate Balance to zero, (iv) pay to the Certificateholders the
Certificateholders' Interest Distribution Amount payable on such Distribution
Date and (v) pay the aggregate fees and expenses of an auction of the assets of
the Trust.
"MONTHLY SERVICING PAYMENT DATE" means the [ ] day of each calendar month,
or, if such day is not a Business Day, the immediately following Business Day,
commencing on ____________, 1997.
"MOODY'S" means Moody's Investors Service, Inc.
"NJHEAA" means the New Jersey Higher Education Assistance Authority, an
agency of the State of New Jersey.
"NOTE" means the Class A-1 Notes and the Class A-2 Notes.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated as of the Closing
Date relating to the Notes, substantially in the form of Exhibit C to the
Indenture, among the Issuer, the Indenture Trustee, the Administrator and The
Depository Trust Company, as the initial Clearing Agency.
"NOTE FINAL MATURITY DATE" means the Class A-1 Final Maturity Date and the
Class A-2 Final Maturity Date, as applicable.
"NOTE INTEREST RATE" means the Class A-1 Rate and the Class A-2 Rate, as
applicable.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"NOTE POOL FACTOR" as of the close of business on a Distribution Date means
a seven-digit decimal figure equal to the outstanding principal balance of the
Notes of either class divided by the original outstanding principal balance of
the Notes of each class. The Note Pool Factor of each class will be 1.0000000 as
of the Closing Date; thereafter, the Note Pool Factor will decline to reflect
any reductions in the outstanding principal balance of the Notes of each class.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings specified
in Section 2.04 of the Indenture.
"NOTEHOLDER" means the Person in whose name a Note is registered in the
Note Register.
"NOTEHOLDERS' DISTRIBUTION AMOUNT" means, with respect to any Distribution
Date, the sum of the Noteholders' Interest Distribution Amount and the
Noteholders' Principal Distribution Amount for such Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the amount of interest accrued at the
respective Note Interest Rate for the related Interest Period on the aggregate
outstanding principal balances of both classes of Notes on the immediately
preceding Distribution Date after giving effect to all principal distributions
to Noteholders on such date (or, in the case of the first Distribution Date, on
the Closing Date) and (ii) the Noteholders' Interest Shortfall for such
Distribution Date; provided, however, that the Noteholders' Interest
Distribution Amount will not include any Noteholders' Interest Index Carryover.
"NOTEHOLDERS' INTEREST INDEX CARRYOVER" means, for any Distribution Date on
which the Class A-1 Rate or the Class A-2 Rate is based on the Student Loan
Rate, the excess of (a) the amount of interest on the Class A-1 Notes or the
Class A-2 Notes, as the case may be, that would have accrued in respect of the
related Interest Period had interest been calculated without regard to the
Student Loan Rate over (b) the amount of interest on the Class A-1 Notes or the
Class A-2 Notes, as the case may be, actually accrued in respect of such
Interest Period based on the Student Loan Rate, together with the unpaid portion
of any such excess from prior Distribution Dates and Interest accrued thereon at
the applicable Note Rate without regard to the Student Loan Rate; PROVIDED,
HOWEVER, that on any Distribution Date after the principal balance of the Class
A-1 Notes or the Class A-2 Notes, as the case may be, has been paid in full, the
Noteholders' Interest Index Carryover for such class shall be equal to zero.
"NOTEHOLDERS' INTEREST SHORTFALL" means, with respect to any Distribution
Date, the excess of (i) the Noteholders' Interest Distribution Amount on the
preceding Distribution Date over (ii) the amount of interest actually
distributed to the Noteholders on such preceding Distribution Date, plus
interest on the amount of such excess interest due to the Noteholders, to the
extent permitted by law, at the weighted average of the Class A-1 Rate and the
Class A-2 Rate from such preceding Distribution Date to the current Distribution
Date.
"NOTEHOLDERS' PERCENTAGE" means a fraction, expressed as a percentage, the
numerator of which is the principal amount of the Notes issued on the Closing
Date and the denominator of which is the sum of the principal amount of the
Notes issued on the Closing Date and the principal balance of the Certificates
issued on the Closing Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the Principal Distribution Amount for such Distribution Date
plus the Noteholders' Principal Shortfall as of the close of the preceding
Distribution Date; provided that the Noteholders' Principal Distribution Amount
will not exceed the outstanding principal balance of the Notes. In addition, (i)
on the Class A-1 Final Maturity Date, the principal required to be distributed
to the Class A-1 Noteholders will include the amount required to reduce the
outstanding principal balance of the Class A-1 Notes to zero, and (ii) on the
Class A-2 Final Maturity Date, the principal required to be distributed to the
Class A-2 Noteholders will include the amount required to reduce the outstanding
principal balance of the Class A-2 Notes to zero.
"NOTEHOLDERS' PRINCIPAL SHORTFALL" means, as of the close of any
Distribution Date, the excess of (i) the Noteholders' Principal Distribution
Amount on such Distribution Date over (ii) the amount of principal actually
distributed to the Noteholders on such Distribution Date.
"NYSHESC" means the N.Y. State Higher Education Services Corporation, an
agency of the State of New York.
"OBLIGOR" on a Financed Student Loan means the borrower or co-borrowers of
such Financed Student Loan and any other Person who owes payments in respect of
such Financed Student Loan, including the Guarantor thereof and, with respect to
any Interest Subsidy Payment or Special Allowance Payment thereon, the
Department.
"OFFICER'S CERTIFICATE" means (i) in the case of the Issuer, a certificate
signed by any Authorized Officer of the Issuer, under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture, and delivered to the Indenture Trustee, (ii) in
the case of the Seller, a certificate signed by any Authorized Officer of the
Seller and (iii) in the case of the Master Servicer or the Administrator, a
certificate signed by any Authorized Officer of the Master Servicer or the
Administrator, as appropriate.
"OPINION OF COUNSEL" means (i) with respect to the Issuer, one or more
written opinions of counsel who may, except as otherwise expressly provided in
the Indenture, be employees of or counsel to the Issuer and who shall be
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.01 of the Indenture, and shall be in form
and substance satisfactory to the Indenture Trustee and (ii) with respect to the
Seller, the Administrator or the Master Servicer, one or more written opinions
of counsel who may be an employee of or counsel to the Seller, the Administrator
or the Master Servicer, which counsel shall be acceptable to the Indenture
Trustee, the Eligible Lender Trustee or the Rating Agencies, as applicable.
"ORIGINATION FEE" means the origination fee payable to the Department by
the lender with respect to any Financed Student Loan (including Consolidation
Loans) made on or after October 1, 1993, equal to 0.50% of the initial principal
balance of such loan.
"OUTSTANDING" means, as of the date of determination, all Notes theretofore
authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the necessary
amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Noteholders thereof (PROVIDED,
HOWEVER, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture); and
(iii)Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser; PROVIDED that in determining
whether the Noteholders of the requisite Outstanding Amount of the
Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document,
Notes owned by the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of
the Indenture Trustee either actually knows to be so owned or has
received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon
the Notes, the Seller or any Affiliate of any of the foregoing
Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"PAYING AGENT" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 of
the Indenture and is authorized by the Issuer to make the payments to and
distributions from the Collection Account and payments of principal of and
interest and any other amounts owing on the Notes on behalf of the Issuer.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance Agency, an
agency of the Commonwealth of Pennsylvania.
"PHYSICAL PROPERTY" has the meaning assigned to such term in the definition
of "Delivery" above.
"POOL BALANCE" means, at any time, the aggregate principal balance of the
Financed Student Loans at the end of the preceding Collection Period including
accrued interest thereon for such Collection Period to the extent such interest
will be capitalized upon commencement of repayment, after giving effect to the
following without duplication: (i) all payments received by the Trust during
such Collection Period from or on behalf of Obligors, (ii) all Purchase Amounts
received by the Trust for such Collection Period from the Seller or the Master
Servicer and (iii) all losses realized on Financed Student Loans liquidated
during such Collection Period.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 of the Indenture and in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"PRINCIPAL DISTRIBUTION AMOUNT" means (i) with respect to the initial
Distribution Date, the amount by which the sum of the outstanding principal
amount of the Notes and the Certificate Balance exceeds the Adjusted Pool
Balance for such Distribution Date and (ii) with respect to each subsequent
Distribution Date, the amount by which the Adjusted Pool Balance for the
preceding Distribution Date exceeds the Adjusted Pool Balance for such
Distribution Date.
"PROCEEDING" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PURCHASE AMOUNT" means, as of the close of business on the last day of a
Collection Period, 100% (or 98%, in the case of any Financed Student Loan
disbursed on or after October 1, 1993, if the related borrower is in default
under such Financed Student Loan) of the amount required to prepay in full the
respective Financed Student Loan under the terms thereof including all accrued
interest thereon and any lost Interest Subsidy Payments and Special Allowance
Payments with respect thereto.
"PURCHASED STUDENT LOAN" means a Financed Student Loan purchased as of the
close of business on the last day of a Collection Period by the Master Servicer
pursuant to Section 3.06 of the Master Servicing Agreement or repurchased by the
Seller pursuant to Section 3.02 of the Sale Agreement.
"RATING AGENCY" means Moody's and Fitch. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Seller, notice of which designation shall be given to the Indenture
Trustee, the Eligible Lender Trustee and the Master Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the 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 rating of the Notes or the Certificates.
"REALIZED LOSS" means the excess of the principal balance (including any
interest that had been or had been expected to be capitalized) of any Liquidated
Student Loan over Liquidation Proceeds with respect to such Student Loan to the
extent allocable to principal (including any interest that had been or had been
expected to be capitalized).
"RECORD DATE" means, with respect to a Monthly Servicing Payment Date,
Distribution Date or Redemption Date, the close of business on the Business Day
preceding such Monthly Servicing Payment Date, Distribution Date or Redemption
Date.
"RECOVERIES" means, with respect to any Liquidated Student Loan, moneys
collected in respect thereof, from whatever source, during any Collection Period
following the Collection Period in which such Financed Student Loan became a
Liquidated Student Loan, net of the sum of any amounts expended by the Master
Servicer for the account of any Obligor and any amounts required by law to be
remitted to the Obligor.
"RESERVE ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 4.01 of the Master Servicing Agreement.
"RESERVE ACCOUNT INITIAL DEPOSIT" means $__________.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any 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, with direct responsibility for the administration of the
Indenture and the other Basic Documents on behalf of the Indenture Trustee and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"SALE AGREEMENT" means the Sale Agreement dated as of June 1, 1997, among
the Issuer, the Seller and the Eligible Lender Trustee.
"SCHEDULE OF FINANCED STUDENT LOANS" means the listing of the Financed
Student Loans set forth in Schedule A to the Sale Agreement and to the Indenture
(which Schedule may be in the form of microfiche).
"SELLER" means First Union National Bank, a national banking association
having its main office in Avondale, Pennsylvania, in its capacity as Seller.
"SERVICING FEE" has the meaning specified in Schedule C to the Master
Servicing Agreement.
"SLS LOAN" means a Financed Student Loan designated as such that is made
under the Federal Supplemental Loans for Students Program pursuant to the Higher
Education Act.
"SPECIAL ALLOWANCE PAYMENTS" means payments, designated as such, consisting
of effective interest subsidies by the Department in respect of the Financed
Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"SPECIFIED RESERVE ACCOUNT BALANCE" with respect to any Distribution Date
generally will be equal to the greater of (i) ___% of the Pool Balance in each
case as of the close of business on the last day of the related Collection
Period and (ii) $_________; PROVIDED, HOWEVER, that in no event will such
balance exceed the sum of the outstanding principal amount of the Notes and the
outstanding principal balance of the Certificates.
"STAFFORD LOAN" means a Financed Student Loan designated as such that is
made under the Federal Stafford Loan Program in accordance with the Higher
Education Act.
"STATE" means any one of the 50 States of the United States of America or
the District of Columbia.
"STUDENT LOAN RATE" means, for any Interest Period, the product of (a) the
quotient obtained by dividing (i) 365 (or 366 in a leap year) by (ii) the actual
number of days elapsed in such Interest Period and (b) the percentage equivalent
of a fraction, (i) the numerator of which is equal to Expected Interest
Collections for the Collection Period relating to such Interest Period less the
Servicing Fees and the Administration Fee payable on the related Distribution
Date and any Servicing Fees paid on the two preceding monthly Servicing Payment
Dates during the related Collection Period and (ii) the denominator of which is
the Pool Balance.
"SUCCESSOR ADMINISTRATOR" has the meaning specified in Section 3.07(e) of
the Indenture.
"SUCCESSOR SERVICER" has the meaning specified in Section 3.07(e) of the
Indenture.
"T-BILL RATE" means, on any day, the weighted average per annum discount
rate (expressed on a bond equivalent basis and applied on a daily basis) for
91-day Treasury Bills sold at the most recent 91-day Treasury Bill auction prior
to such date as reported by the U.S. Treasury Department. In the event that the
results of the auctions of 91-day Treasury Bills cease to be published or
reported as provided above, or that no such auction is held in a particular
week, then the "T-Bill Rate" in effect as a result of the last such publication
or report shall remain in effect until such time, if any, as the results of
auctions of 91-day Treasury Bills shall again be so published or reported or
such an auction is held, as the case may be. The T-Bill Rate shall be subject to
a Lock-In Period of six Business Days.
"TREASURY REGULATIONS" means regulations, including proposed or temporary
regulations, promulgated under the Code. References in any document or
instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"TRUST" means the Issuer, established pursuant to the Trust Agreement.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"TRUST ACCOUNTS" has the meaning specified in Section 4.01 of the Master
Servicing Agreement.
"TRUST AGREEMENT" means the Trust Agreement dated as of June [__] 1997,
between the Depositor and the Eligible Lender Trustee.
"TRUST CERTIFICATE" means a Certificate.
"TRUST ESTATE" means all right, title and interest of the Trust (or the
Eligible Lender Trustee on behalf of the Trust) in and to the property and
rights assigned to the Trust pursuant to Article II of the Sale Agreement, all
funds on deposit from time to time in the Trust Accounts and all other property
of the Trust from time to time, including any rights of the Eligible Lender
Trustee and the Trust pursuant to the Sale Agreement and the Administration
Agreement.
"TRUST FEES" means the fees of the Indenture Trustee, the Servicing Fee,
the Administration Fee and the fees of the Eligible Lender Trustee.
"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.
"USAF" means the United States Aid Funds, Inc., a non-profit corporation.
------------------------------------------------------------------------------
TRUST AGREEMENT
between
FIRST UNION NATIONAL BANK
as Depositor
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of June 1, 1997
------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND USAGE
ARTICLE II - ORGANIZATION
SECTION 2.01. NAME
SECTION 2.02. OFFICE
SECTION 2.03. PURPOSES AND POWERS
SECTION 2.04. APPOINTMENT OF ELIGIBLE LENDER TRUSTEE
SECTION 2.05. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE
SECTION 2.06. DECLARATION OF TRUST
SECTION 2.07. LIABILITY OF THE CERTIFICATEHOLDERS
SECTION 2.08. TITLE TO TRUST PROPERTY
SECTION 2.09. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
SECTION 2.10. FEDERAL INCOME TAX ALLOCATIONS
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. INITIAL BENEFICIAL OWNERSHIP
SECTION 3.02. THE TRUST CERTIFICATES
SECTION 3.03. AUTHENTICATION OF TRUST CERTIFICATES
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST CERTIFICATES
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES
SECTION 3.06. PERSONS DEEMED OWNERS
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY
SECTION 3.09. APPOINTMENT OF CERTIFICATE PAYING AGENT
SECTION 3.10. DISPOSITION BY DEPOSITOR
SECTION 3.12. NOTICES TO CLEARING AGENCY
SECTION 3.13. DEFINITIVE CERTIFICATES
ARTICLE IV - ACTIONS BY ELIGIBLE LENDER TRUSTEE
SECTION 4.01. PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS
SECTION 4.02. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN MATTERS
SECTION 4.03. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY
SECTION 4.04. RESTRICTIONS ON CERTIFICATEHOLDERS' POWER
SECTION 4.05. MAJORITY CONTROL
ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. APPLICATION OF TRUST FUNDS
SECTION 5.02. METHOD OF PAYMENT
SECTION 5.03. NO SEGREGATION OF MONEYS; NO INTEREST
SECTION 5.04. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS, CERTIFICATEHOLDERS,
THE INTERNAL REVENUE SERVICE AND OTHERS
SECTION 5.05. SIGNATURE ON RETURNS; TAX MATTERS PARTNER
SECTION 5.06. CAPITAL ACCOUNTS
ARTICLE VI - AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE
SECTION 6.01. GENERAL AUTHORITY
SECTION 6.02. GENERAL DUTIES
SECTION 6.03. ACTION UPON INSTRUCTION
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE MASTER
SERVICING AGREEMENT, THE SALE AGREEMENT OR IN INSTRUCTIONS
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS
ARTICLE VII - CONCERNING THE ELIGIBLE LENDER TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES
SECTION 7.02. FURNISHING OF DOCUMENTS
SECTION 7.03. REPRESENTATIONS AND WARRANTIES
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY
SECTION 7.06. ELIGIBLE LENDER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES OR
FINANCED STUDENT LOANS
SECTION 7.07. ELIGIBLE LENDER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES
ARTICLE VIII - COMPENSATION OF ELIGIBLE LENDER TRUSTEE
ARTICLE IX - TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT
SECTION 9.02. DISSOLUTION UPON INSOLVENCY OF THE DEPOSITOR
ARTICLE X - SUCCESSOR ELIGIBLE LENDER TRUSTEES AND ADDITIONAL ELIGIBLE
LENDER TRUSTEES
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR ELIGIBLE LENDER TRUSTEE
SECTION 10.02. RESIGNATION OR REMOVAL OF ELIGIBLE LENDER TRUSTEE
SECTION 10.03. SUCCESSOR ELIGIBLE LENDER TRUSTEE
SECTION 10.04. MERGER OR CONSOLIDATION OF ELIGIBLE LENDER TRUSTEE
SECTION 10.05. APPOINTMENT OF CO-ELIGIBLE LENDER TRUSTEE OR SEPARATE
ELIGIBLE LENDER TRUSTEE
ARTICLE XI - MISCELLANEOUS
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN CERTIFICATEHOLDERS
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS
SECTION 11.04. NOTICES
SECTION 11.05. SEVERABILITY
SECTION 11.06. SEPARATE COUNTERPARTS
SECTION 11.07. SUCCESSORS AND ASSIGNS
SECTION 11.08. NO PETITION
SECTION 11.09. NO RECOURSE
SECTION 11.10. HEADINGS
SECTION 11.11. GOVERNING LAW
EXHIBIT A - FORM OF TRUST CERTIFICATE
EXHIBIT B - FORM OF CERTIFICATE DEPOSITORY AGREEMENT
<PAGE>
TRUST AGREEMENT dated as of June 1, 1997, between FIRST UNION NATIONAL
BANK ("First Union"), a national banking association having its main office in
Avondale, Pennsylvania, as Depositor, and THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, not in its individual capacity but solely as
Eligible Lender Trustee.
The Depositor and the Eligible Lender Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in Appendix
A to the Indenture, which also contains rules as to construction and usage that
shall be applicable herein.
ARTICLE II
ORGANIZATION
SECTION 2.01. NAME. The Trust created hereby shall be known as "First
Union 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. The Trust shall
constitute a business trust within the meaning of Section 3801(a) of the
Delaware Business Trust Act for which the Trustee has filed a certificate of
trust with the Secretary of State of the State of Delaware pursuant to Section
3810(a) of the Delaware Business Trust Act.
SECTION 2.02. OFFICE. The office of the Trust shall be in care of the
Eligible Lender Trustee at its Corporate Trust Office or at such other address
as the Eligible Lender Trustee may designate by written notice to the
Certificateholders and the Depositor.
SECTION 2.03. PURPOSES AND POWERS. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and
the Trust Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to fund the Reserve Account pursuant to Section
4.06 of the Master Servicing Agreement and to purchase the
Financed Student Loans pursuant to the Sale Agreement;
(iii)to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of
this Agreement and the Master Servicing Agreement any portion of
the Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions
to the Certificateholders, the Noteholders and the others
specified in Section 4.05 of the Master Servicing Agreement.
The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the other Basic Documents. In no event shall the Eligible Lender
Trustee, the Master Servicer or any other person have any power to (i) vary the
investment of the Certificateholders in the Certificates or to substitute new
investments or reinvest so as to enable the Trust to take advantage of
variations in the market to improve the investment of the Certificateholders in
the Certificates or (ii) agree to any change in the terms of a Financed Student
Loan that would be a "significant modification" within the meaning of Treasury
Regulations Section 1.1001-3 (or any successor regulation), unless an opinion of
nationally recognized tax counsel, obtained at the sole expense of the party
requesting an action otherwise prohibited by clause (i) or (ii) of this sentence
and delivered to the Eligible Lender Trustee, states that such action would (a)
not cause the Certificates (including the Excess Distribution Certificate) to be
treated other than as interests in a partnership for federal and California
state tax purposes, (b) not cause the Notes to be treated other than as debt of
the Trust for federal and California state purposes and (c) not otherwise cause
additional federal or California state tax to be imposed upon the
Certificateholders (including the Depositor as holder of the Excess Distribution
Certificate), the Noteholders, the Eligible Lender Trustee or the Trust.
SECTION 2.04. APPOINTMENT OF ELIGIBLE LENDER TRUSTEE. The Depositor
hereby appoints the Eligible Lender Trustee as trustee of the Trust effective as
of the date hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.05. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Eligible Lender Trustee, as of the date hereof, the sum of $1.00. The Eligible
Lender Trustee hereby acknowledges receipt in trust from the Depositor, as of
the date hereof, of the foregoing contribution, which shall constitute the
initial Trust Estate and shall be deposited in the Collection Account. The
Depositor shall pay the organizational expenses of the Trust as they may arise
or shall, upon the request of the Eligible Lender Trustee, promptly reimburse
the Eligible Lender Trustee for any such expenses paid by the Eligible Lender
Trustee.
SECTION 2.06. DECLARATION OF TRUST. The Eligible Lender Trustee hereby
declares that it will hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the other Basic Documents. It is
the intention of the parties hereto that the Trust constitute a business trust
under Delaware law and that this Agreement constitute the governing instrument
of such trust. It is the intention of the parties hereto that, solely for income
and franchise tax purposes, the Trust shall be treated as a partnership, with
the assets of the partnership being the Financed Student Loans and other assets
held by the Trust, the partners of the partnership being the Certificateholders
(including the Depositor in its capacity as recipient of distributions from the
Reserve Account pursuant to the Excess Distribution Certificate), and the Notes
being debt of the partnership. The parties agree that, unless otherwise required
by appropriate tax authorities, the Trust will file or cause to be filed annual
or other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes. Effective
as of the date hereof, the Eligible Lender Trustee shall have all rights, powers
and duties set forth herein with respect to accomplishing the purposes of the
Trust.
SECTION 2.07. LIABILITY OF THE CERTIFICATEHOLDERS. (a) The Depositor
shall be liable directly to and will indemnify the injured party for all losses,
claims, damages, liabilities and expenses of the Trust (including Expenses, to
the extent not paid out of the Trust Estate) to the extent that the Depositor
would be liable if the Trust were a partnership under the Delaware Revised
Uniform Limited Partnership Act in which the Depositor were a general partner;
PROVIDED, HOWEVER, that the Depositor shall not be liable for any losses
incurred by a Certificateholder or a Certificate Owner in the capacity of an
investor in the Trust Certificates or a Noteholder or a Note Owner in the
capacity of an investor in the Notes. In addition, any third party creditors of
the Trust (other than in connection with the obligations described in the
preceding sentence for which the Depositor shall not be liable) shall be deemed
third party beneficiaries of this paragraph. The obligations of the Depositor
under this paragraph shall be evidenced by the Excess Distribution Certificate
described in Section 3.10, which shall be deemed to be a separate class of
certificates from all other Trust Certificates issued by the Trust.
(b) No Certificateholder, other than to the extent set forth in
paragraph (a), shall have any personal liability for any liability or obligation
of the Trust.
(c) Any or all of Section 2.07(a) or 3.10(b) hereof (the "Partnership
Qualification Provisions") shall no longer be applicable or part of this
Agreement in the event an Opinion of Counsel is delivered to the Eligible Lender
Trustee to the effect that the deletion of the Partnership Qualification
Provisions will not cause the Trust to be classified as an association or other
entity taxable as a corporation for relevant state income and franchise tax
purposes.
SECTION 2.08. TITLE TO TRUST PROPERTY. Legal title to all the Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Eligible Lender Trustee, a co-trustee and/or
a separate trustee, as the case may be; provided that legal title to the
Financed Student Loans shall be vested at all times in the Eligible Lender
Trustee on behalf of the Trust.
SECTION 2.09. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Eligible Lender Trustee that:
(a) The Depositor is duly organized and validly existing as a national
banking association in good standing under the laws of the United States of
America, with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted.
(b) The Depositor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full
corporate power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust (or with the Eligible Lender Trustee on
behalf of the Trust) and the Depositor has duly authorized such sale and
assignment and deposit to the Trust (or to the Eligible Lender Trustee on behalf
of the Trust) by all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Depositor by all
necessary corporate action.
(c) This Agreement constitutes a legal, valid and binding obligation
of the Depositor enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and similar laws relating to creditors'
rights generally or the rights of creditors of banks the deposit accounts of
which are insured by the FDIC and subject to general principles of equity.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the Depositor's
knowledge, any order, rule or regulation applicable to the Depositor of any
court or of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or its
properties.
SECTION 2.10. FEDERAL INCOME TAX ALLOCATIONS
(a) Income and Loss Allocations. After giving effect to the special
allocations set forth in subparagraph (b) of this Section 2.10 and for purposes
of maintaining Capital Accounts under Section 5.06, gross income items of the
Trust for any Interest Period as determined for Federal income tax purposes
shall be allocated as follows:
(1) first, among the Certificateholders as of the close of business on
the last day of such Interest Period, in proportion to the Certificate Balance
of the Certificates owned by them on such date, an amount of gross income up to
the sum of (i) the portion of the Certificateholders' Interest Distribution
Amount and the Certificateholders' Interest Index Carryover, if any, for the
related Distribution Date allocable to such Interest Period, (ii) return on the
excess, if any, of the Certificateholders' Interest Distribution Amount for the
preceding Distribution Date over the amount in respect of return on the
Certificates that is actually distributed to Certificateholders on such
preceding Distribution Date, to the extent permitted by law, at the Certificate
Rate for such Interest Period and (iii) the portion of the market discount on
the Financed Student Loans accrued during such Interest Period that is allocable
to the excess, if any, of the initial aggregate principal amount of the
Certificates over their initial aggregate issue price; and
(2) the balance of Profits, if any, to the Depositor.
If the items of gross income of the Trust for any month are
insufficient for the allocations described in clause (1) above, subsequent items
of gross income shall first be allocated to make up such shortfall before
Profits are allocated as provided in clause (b). Loss of the Trust for any
Interest Period shall be allocated to the Depositor to the extent the Depositor
is reasonably expected to bear the economic burden of such Loss, and any
remaining Loss shall be allocated among the Certificateholders as of the close
of business on the last day of such Interest Period in proportion to the
Certificate Balance of Trust Certificates owned by them on such date. If any
items of loss or deduction are allocated to Certificateholders and the Depositor
subsequently determines that the economic loss to Certificateholders will be
less than was expected at the time such allocations were made, additional items
of gross income will be allocated to Certificateholders in subsequent periods to
offset the excess allocations of losses and deductions to Certificateholders
before any Profits are allocated to the Depositor as provided in clause (2)
above.
(b) Special Allocations.
(1) In the event any Certificateholder unexpectedly received any
adjustments, allocations or distributions described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Trust income and gain
shall be specially allocated to such Certificateholder in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, the
deficit, if any, in the balance of the Capital Account of such Certificateholder
as quickly as possible. This Section 2.10(b) is intended to comply with the
qualified income offset provision in Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations.
(2) In the event the initial issue price of Certificates differs from
their initial Certificate Balance, there shall be specially allocated to the
Certificateholders the portion, if any, of the offset for premium (in the case
the issue price of the Certificates exceeds the Certificate Balance) on the
Financed Student Loans accruing for a calendar month that is attributable to
such difference.
(c) Liquidating Profit or Loss. Liquidating Profit or Loss shall be
allocated, after all other adjustments are made to the Capital Accounts
(including adjustments to reflect the Liquidating Distribution), as follows:
(1) First, among the Certificateholders in proportion to their
ownership of the principal amount of Certificates, in an amount that would cause
their Capital Account balances to equal zero (in the case of the Depositor,
taking into account the Capital Account balance of the Depositor only to the
extent it relates to Certificates owned by the Depositor); and
(2) Any balance, to the Depositor.
(d) Tax Allocations. For Federal income tax purposes, each item of income,
gain, loss and deduction of the Trust shall be allocated among the
Certificateholders and the Depositor in a manner consistent with the allocations
set forth in this Section 2.10, subject to the provisions of Section 704(c) of
the Code. Notwithstanding anything to contrary set forth in this Agreement, the
Depositor is authorized to modify the allocation of this Section 2.10(d) and
Sections 2.10(a), (b) and (c) if necessary or appropriate, in the Depositor's
sole discretion, for the allocations to fairly reflect the economic gain, income
or loss to the Depositor or the Certificateholders, or as otherwise required by
the Code or the Treasury Regulations.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. INITIAL BENEFICIAL OWNERSHIP. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.05 and until
the issuance of the Trust Certificates, the Depositor shall be the sole
beneficial owner of the Trust.
SECTION 3.02. THE TRUST CERTIFICATES. The Trust Certificates shall be
issued in denominations of $1,000 or in integral multiples of $1,000 in excess
thereof; PROVIDED, HOWEVER, that the Excess Distribution Certificate issued to
the Depositor shall be issued in such denomination as to include any residual
amount of the Initial Certificate Balance. 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 3.03. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently with
the initial sale of the Financed Student Loans to the Trust pursuant to the Sale
Agreement, the Eligible Lender Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the Initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further action by the Depositor, in
authorized denominations. No Trust Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Trust Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Eligible
Lender Trustee by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication. No further Trust Certificates shall be issued
except pursuant to Section 3.04, 3.05 or 3.13 hereunder.
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Eligible
Lender Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The Eligible
Lender Trustee shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.08, the Eligible Lender
Trustee shall execute, authenticate and deliver, 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 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Eligible Lender Trustee and the Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which requirements
include membership or participation in Security Transfer Agent's Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act. Each Trust Certificate
surrendered for registration of transfer or exchange shall be 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 notwithstanding, the Eligible
Lender Trustee shall not be required to make and the Certificate Registrar need
not register transfers or exchanges of Trust Certificates for a period of 15
days preceding any Distribution Date with respect to the Trust Certificates.
The Trust Certificates and any beneficial interest in such Trust
Certificates may not be acquired by or with the assets of (a) employee benefit
plans (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, (b)
plans described in Section 4975(e)(1) of the Code, including individual
retirement accounts and Keogh Plans, (c) governmental plans (as defined in
Section 3(32) of ERISA) subject to any federal, state, or local law which is, to
a material extent, similar to the foregoing provisions of ERISA or the Code, and
(d) entities whose underlying assets include plan assets (as defined in U.S.
Department of Labor Regulation ss. 2510.3-101) by reason of plan investment in
such entities (each of (a), (b), (c) and (d), a "Benefit Plan Investor"). Each
transferee of a Definitive Certificate shall be required to represent, and each
transferee of a beneficial interest in a Book-Entry Certificate shall be deemed
to represent, (a) that it is not a Benefit Plan Investor and is not acquiring
such Trust Certificate or interest with the assets of a Benefit Plan Investor
and (b) that if such Trust Certificate or interest is subsequently deemed to be
a plan asset, it will dispose of such Trust Certificate or interest. Each Trust
Certificate shall bear a legend referring to the restrictions contained in this
paragraph.
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.
If (a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate, and (b)
there shall be delivered to the Certificate Registrar and the Eligible Lender
Trustee such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Trust Certificate shall
have been acquired by a bona fide purchaser, the Eligible Lender Trustee on
behalf of the Trust shall execute and the Eligible Lender Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Eligible Lender Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.06. PERSONS DEEMED OWNERS. Prior to due presentation of a
Trust Certificate for registration of transfer, the Eligible Lender Trustee or
the Certificate Registrar and any agent of any thereof may treat the Person in
whose name any Trust Certificate shall be registered in the Certificate Register
as the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.01 and for all other purposes whatsoever,
and neither the Eligible Lender Trustee, the Certificate Registrar nor any agent
of any thereof shall be bound by any notice to the contrary.
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Eligible Lender Trustee shall furnish or cause to be furnished to
the Depositor, within 15 days after receipt by the Eligible Lender Trustee of a
request therefor from the Depositor in writing, a list, in such form as the
Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Eligible Lender
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Upon receipt of any such application, the Eligible Lender
Trustee will promptly notify the Depositor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. Each Certificateholder, by receiving and holding a Trust Certificate,
shall be deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Eligible Lender Trustee accountable by reason of the disclosure
of its name and address, regardless of the source from which such information
was derived.
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Eligible Lender
Trustee shall maintain in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where Trust Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Eligible Lender Trustee in respect of the Trust
Certificates and the other Basic Documents may be served. The Eligible Lender
Trustee initially designates One First National Plaza, Suite 0126, Chicago,
Illinois 60670, as the location of its principal Corporate Trust Office. The
Eligible Lender Trustee's New York office is located at 14 Wall Street, New
York, New York 10005, Attention: Corporate Trust Administration. The Eligible
Lender Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.09. APPOINTMENT OF CERTIFICATE PAYING AGENT. The Certificate
Paying Agent shall make distributions to Certificateholders from the amounts
received from the Indenture Trustee out of the Trust Accounts pursuant to
Section 5.01 and shall report the amounts of such distributions to the Eligible
Lender Trustee. Any Certificate Paying Agent shall have the revocable power to
receive such funds from the Indenture Trustee for the purpose of making the
distributions referred to above. The Eligible Lender Trustee may revoke such
power and remove the Certificate Paying Agent if the Eligible Lender Trustee
determines in its sole discretion that the Certificate Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Certificate Paying Agent shall initially be the Eligible Lender Trustee, and
any co-paying agent chosen by the Eligible Lender Trustee, and acceptable to the
Administrator (which consent shall not be unreasonably withheld). The Eligible
Lender Trustee shall be permitted to resign as Certificate Paying Agent upon 30
days' written notice to the Administrator. In the event that the Eligible Lender
Trustee shall no longer be the Certificate Paying Agent, the Eligible Lender
Trustee, shall appoint a successor to act as Certificate Paying Agent (which
shall be a bank or trust company). The Eligible Lender Trustee shall cause such
successor Certificate Paying Agent or any additional Certificate Paying Agent
appointed by the Eligible Lender Trustee to execute and deliver to the Eligible
Lender Trustee an instrument in which such successor Certificate Paying Agent or
additional Certificate Paying Agent shall agree with the Eligible Lender Trustee
that as Certificate Paying Agent, such successor Certificate Paying Agent or
additional Certificate Paying Agent will hold all sums, if any, held by it for
payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Certificate Paying Agent shall return all unclaimed
funds to the Eligible Lender Trustee and upon removal of a Certificate Paying
Agent such Certificate Paying Agent shall also return all funds in its
possession to the Eligible Lender Trustee. The provisions of Sections 7.01,
7.03, 7.04, 7.05 and 8.01 shall apply to the Eligible Lender Trustee also in its
role as Certificate Paying Agent, for so long as the Eligible Lender Trustee
shall act as Certificate Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Certificate Paying Agent shall include any co-paying agent unless the context
requires otherwise.
SECTION 3.10. DISPOSITION BY DEPOSITOR. (a) The Excess Distribution
Certificate shall evidence the Depositor's entitlement to excess amounts on
deposit in the Reserve Account, subject to certain limitations, to the extent
that the amount on deposit in the Reserve Account exceeds the Specified Reserve
Account Balance pursuant to Section 4.06(e) of the Master Servicing Agreement
and otherwise pursuant to Section 4.06(g) of the Master Servicing Agreement.
(b) Any attempted transfer of the Excess Distribution Certificate
shall be void. The Eligible Lender Trustee shall cause the Excess Distribution
Certificate issued to the Depositor on the Closing Date to contain a legend
stating "THIS CERTIFICATE IS NONTRANSFERABLE".
SECTION 3.11. BOOK-ENTRY CERTIFICATES. The Trust Certificates (other
than the Excess Distribution Certificate), upon original issuance, will be
issued in the form of a typewritten Trust Certificate or Trust Certificates
representing Book-Entry Certificates, to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Trust; PROVIDED,
HOWEVER, that one Definitive Certificate (as defined below) shall be issued to
the Depositor pursuant to Section 3.10. Such Book-Entry Certificate or
Book-Entry Certificates shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Certificate Owner will receive a Definitive Certificate representing such
Certificate Owner's interest in such Trust Certificate, except as provided in
Section 3.13. Unless and until definitive, fully registered Trust Certificates
(the "Definitive Certificates") have been issued to Certificate Owners pursuant
to Section 3.13:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Certificate Registrar and the Eligible Lender Trustee shall
be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of principal of and
interest on the Trust Certificates and the giving of instructions
or directions hereunder) as the sole Certificateholder and shall
have no obligation to the Certificate Owners;
(iii)to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Certificate Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 3.13, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
principal and interest on the Trust Certificates to such Clearing
Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of
Trust Certificates evidencing a specified percentage of the
Certificate Balance, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest
in the Trust Certificates and has delivered such instructions to
the Eligible Lender Trustee.
SECTION 3.12. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.13, the Eligible Lender Trustee shall give all such
notices and communications specified herein to be given to Certificateholders to
the Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.13. DEFINITIVE CERTIFICATES. If (i) the Administrator
advises the Eligible Lender Trustee in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities with respect
to the Trust Certificates, and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Eligible Lender
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, a Master
Servicer Default or an Administrator Default, Certificate Owners representing
beneficial interests aggregating at least a majority of the Certificate Balance
advise the Clearing Agency (which shall then notify the Eligible Lender Trustee)
in writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interest of the Certificate Owners, then the
Eligible Lender Trustee shall cause the Clearing Agency to notify all
Certificate Owners of the occurrence of any such event and of the availability
of the Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Eligible Lender Trustee of the typewritten Trust Certificate or
Trust Certificates representing the Book-Entry Certificates by the Clearing
Agency, accompanied by registration instructions, the Eligible Lender Trustee
shall execute and authenticate the Definitive Certificates in accordance with
the instructions of the Clearing Agency. Neither the Certificate Registrar nor
the Eligible Lender Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Eligible
Lender Trustee shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall, at the
expense of the Depositor, be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Eligible Lender
Trustee, as evidenced by its execution thereof.
ARTICLE IV
ACTIONS BY ELIGIBLE LENDER TRUSTEE
SECTION 4.01. PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. With respect to the following matters, the Eligible Lender
Trustee shall not take action unless at least 30 days before the taking of such
action, the Eligible Lender Trustee shall have notified the Certificateholders
and the Rating Agencies in writing of the proposed action and the
Certificateholders shall not have notified the Eligible Lender Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of the
Financed Student Loans) and the compromise of any material action, claim or
lawsuit brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection of Financed Student Loans);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
(d) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Certificateholders; or
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Certificate Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar, or the consent to the assignment
by the Note Registrar, Certificate Paying Agent or Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this Agreement,
as applicable.
SECTION 4.02. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS. The Eligible Lender Trustee shall not have the power, except upon the
direction of the Certificateholders, to (a) remove the Master Servicer or the
Administrator under the Master Servicing Agreement pursuant to Section 7.01
thereof or (b) except as expressly provided in the Basic Documents, sell the
Financed Student Loans after the termination of the Indenture. The Eligible
Lender Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Certificateholders.
SECTION 4.03. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY.
The Eligible Lender Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders and the delivery to the Eligible Lender
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.04. RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Eligible Lender Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Eligible Lender Trustee under this Agreement
or any of the other Basic Documents or would be contrary to Section 2.03 nor
shall the Eligible Lender Trustee be permitted to follow any such direction, if
given.
SECTION 4.05. MAJORITY CONTROL. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement may
be taken by the Certificateholders of Trust Certificates evidencing not less
than a majority of the Certificate Balance. Except as expressly provided herein,
any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificateholders of Trust
Certificates evidencing not less than a majority of the Certificate Balance at
the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. APPLICATION OF TRUST FUNDS.
(a) On each Distribution Date, the Eligible Lender Trustee shall
distribute to Certificateholders (i) the Certificateholders' Interest
Distribution Amount for such Distribution Date on a pro rata basis according to
amounts payable in respect of the Certificateholders' Interest Distribution
Amount, (ii) the Certificateholders' Principal Distribution Amount for such
Distribution Date, if any, on a pro rata basis according to amounts payable in
respect of the Certificateholders' Principal Distribution Amount, and (iii) the
Certificateholders' Interest Index Carryover for such Distribution Date, if any,
on a pro rata basis according to amounts payable in respect of
Certificateholders' Interest Index Carryover, as received from the Indenture
Trustee pursuant to Section 4.05 of the Master Servicing Agreement on such
Distribution Date.
(b) On each Distribution Date, the Eligible Lender Trustee shall send
to each Certificateholder the statement provided to the Eligible Lender Trustee
by the Administrator pursuant to Section 4.07 of the Master Servicing Agreement
on such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Eligible Lender Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholders sufficient
funds for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Eligible Lender Trustee from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Trust to be remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-U.S. Certificateholder), the Eligible Lender Trustee
in its sole discretion may (but unless otherwise required by law shall 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 shall reasonably cooperate with
such Certificateholder in making such claim so long as such Certificateholder
agrees to reimburse the Eligible Lender Trustee for any out-of-pocket expenses
incurred.
SECTION 5.02. METHOD OF PAYMENT. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions signed by two authorized officers, if
any, at least five Business Days prior to such Distribution Date and such
Certificateholder's Trust Certificates in the aggregate evidence a denomination
of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register; PROVIDED, HOWEVER, that, unless Definitive Certificates
have been issued pursuant to Section 3.13, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of any
Trust Certificate (whether on the Certificate Final Maturity Date or otherwise)
will be payable only upon presentation and surrender of such Trust Certificate
at the Corporate Trust Office of the Eligible Lender Trustee or such other
location specified in writing to the Certificateholder thereof.
SECTION 5.03. NO SEGREGATION OF MONEYS; NO INTEREST. Subject to
Section 5.01, moneys received by the Eligible Lender Trustee hereunder need not
be segregated in any manner except to the extent required by law or the Master
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Eligible Lender Trustee shall not be liable for any
interest thereon.
SECTION 5.04. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. The Eligible Lender
Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (b) deliver to each
Certificateholder (and to each Person who was a Certificateholder at any time
during the applicable calendar year), as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each such Certificateholder to prepare its Federal and
state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, Internal Revenue Service Form
1065), and make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes, (d) cause such tax returns to be signed in the
manner required by law and (e) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.01(c) with respect to
income or distributions to Certificateholders. The Eligible Lender Trustee shall
elect under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Financed Student Loans. The Eligible
Lender Trustee shall not make the election provided under Section 754 of the
Code. The Eligible Lender Trustee shall be entitled to hire an independent
accounting firm to perform the functions described in this Section 5.04, the
reasonable fees and expenses of which shall be paid by the Depositor.
SECTION 5.05. SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a) The
Eligible Lender Trustee shall sign on behalf of the Trust the tax returns of the
Trust, unless applicable law requires a Certificateholder to sign such
documents, in which case such documents shall be signed by the Depositor.
(b) The Depositor shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
SECTION 5.06. CAPITAL ACCOUNTS. The Trust shall maintain accounts
("Capital Accounts") with respect to each Certificateholder (including the
Depositor) in accordance with the following provisions:
(a) Each Certificateholder's Capital Account shall be increased by the
Capital Contributions (as defined below) of such Certificateholder, such
Certificateholder's distributive share of gross income (and any Liquidating
Profits) and any items in the nature of income or gain which are specifically
allocated to such Certificateholder pursuant to Section 2.10(b) of this
Agreement.
(b) Each Certificateholder's Capital Account shall be reduced by any
amount distributed to such Certificateholder (including, in the case of the
Depositor, any amount released or otherwise distributed to the Depositor from
the Reserve Account under Section 4.06 of the Master Servicing Agreement) and
such Certificateholder's distributive share of Losses and deductions ( and any
Liquidating Loss), including any special allocation pursuant to Section 2.10(b).
(c) In the event all or a portion of a Certificate is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it related to such Certificate
or a portion thereof.
(d) Notwithstanding the above, the Capital Accounts shall be adjusted
in accordance with the provisions governing the economic rights of the
Certificateholders, as set forth herein and in the Basic Documents.
"Capital Contribution" means the amount of any cash and the fair
market value of any property contributed to the Trust by a Certificateholder
(including any amounts deemed to be contributed in connection with the original
issuance of the Certificates), including, in the case of the Depositor, the fair
market value of the Financed Student Loans deemed to be contributed by the
Depositor to the Trust, taking into account the provisions of Section
707(a)(2)(B) of the Code and the Treasury Regulations thereunder. The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Section 1.704-1(b)
of the Treasury Regulations and shall be interpreted in a manner consistent
therewith.
ARTICLE VI
AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE
SECTION 6.01. GENERAL AUTHORITY. The Eligible Lender Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party, in each case, in such form as the Depositor shall approve as evidenced
conclusively by the Eligible Lender Trustee's execution thereof, and, on behalf
of the Trust, to direct the Indenture Trustee to authenticate and deliver Notes
in the aggregate principal amount of $[ ]. The Eligible Lender Trustee is also
authorized and directed on behalf of the Trust (i) to acquire and hold legal
title to the Financed Student Loans from the Depositor and (ii) to take all
actions required pursuant to Section 3.02(c) of the Master Servicing Agreement,
and otherwise follow the direction of and cooperate with the Administrator in
submitting, pursuing and collecting any claims to and with the Department with
respect to any Interest Subsidy Payments and Special Allowance Payments relating
to the Financed Student Loans.
In addition to the foregoing, the Eligible Lender Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Eligible Lender Trustee is further
authorized from time to time to take such action as the Administrator directs or
instructs with respect to the Basic Documents and is directed to take such
action to the extent that the Administrator is expressly required pursuant to
the Basic Documents to cause the Eligible Lender Trustee to act.
SECTION 6.02. GENERAL DUTIES. It shall be the duty of the Eligible
Lender Trustee to discharge (or cause to be discharged) all its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to and in accordance with the provisions of this
Agreement and the other Basic Documents. Without limiting the foregoing, the
Eligible Lender Trustee shall on behalf of the Trust file and prove any claim or
claims that may exist on behalf of the Trust against the Depositor in connection
with any claims paying procedure as part of an insolvency or a receivership
proceeding involving the Depositor. Notwithstanding the foregoing, the Eligible
Lender Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the other Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform any act or
to discharge any duty of the Eligible Lender Trustee hereunder or under any
other Basic Document, and the Eligible Lender Trustee shall not be held liable
for the default or failure of the Administrator to carry out its obligations
under the Administration Agreement. Except as expressly provided in the Basic
Documents, the Eligible Lender Trustee shall have no obligation to administer,
service or collect the Financed Student Loans or to maintain, monitor or
otherwise supervise the administration, servicing or collection of the Financed
Student Loans.
SECTION 6.03. ACTION UPON INSTRUCTION. (a) Subject to Article VII,
Section 7.01 and in accordance with the terms of the Basic Documents, the
Certificateholders may by written instruction direct the Eligible Lender Trustee
in the management of the Trust. Such direction may be exercised at any time by
written instruction of the Certificateholders pursuant to Article VII.
(b) The Eligible Lender Trustee shall not be required to take any
action hereunder or under any other Basic Document if the Eligible Lender
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such action is likely to result in liability on the part of the Eligible
Lender Trustee or is contrary to the terms hereof or of any other Basic Document
or is otherwise contrary to law.
(c) Whenever the Eligible Lender Trustee is unable to determine the
appropriate course of action between alternative courses of action permitted or
required by the terms of this Agreement or under any other Basic Document, the
Eligible Lender Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders requesting
instruction as to the course of action to be adopted, and to the extent the
Eligible Lender Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, the Eligible Lender Trustee
shall not be liable on account of such action to any Person. If the Eligible
Lender Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Eligible Lender Trustee is unsure as to the
application of any provision of this Agreement or any other Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Eligible Lender Trustee or is silent
or is incomplete as to the course of action that the Eligible Lender Trustee is
required to take with respect to a particular set of facts, the Eligible Lender
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction and, to the
extent that the Eligible Lender Trustee acts or refrains from acting in good
faith in accordance with any such instruction received, the Eligible Lender
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Eligible Lender Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE
MASTER SERVICING AGREEMENT, THE SALE AGREEMENT OR IN INSTRUCTIONS. The Eligible
Lender Trustee shall not have any duty or obligation to manage, make any payment
with respect to, register, record, sell, service, dispose of or otherwise deal
with the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Eligible Lender Trustee is a party, except as expressly provided by the terms of
this Agreement, the Master Servicing Agreement, the Sale Agreement or in any
document or written instruction received by the Eligible Lender Trustee pursuant
to Section 6.03; and no implied duties or obligations shall be read into this
Agreement or any other Basic Document against the Eligible Lender Trustee. The
Eligible Lender Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Trust or to record
this Agreement or any other Basic Document. The Eligible Lender Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, The First National Bank
of Chicago, in its individual capacity or as the Eligible Lender Trustee that
are not related to the ownership or the administration of the Trust Estate.
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Eligible Lender Trustee shall not manage, control, use, sell,
service, dispose of or otherwise deal with any part of the Trust Estate except
(i) in accordance with the powers granted to and the authority conferred upon
the Eligible Lender Trustee pursuant to this Agreement, (ii) in accordance with
the other Basic Documents to which it is a party and (iii) in accordance with
any document or instruction delivered to the Eligible Lender Trustee pursuant to
Section 6.03.
SECTION 6.06. RESTRICTIONS. The Eligible Lender Trustee shall not take
any action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Eligible Lender
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the
Eligible Lender Trustee to take action that would violate the provisions of this
Section.
ARTICLE VII
CONCERNING THE ELIGIBLE LENDER TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Eligible Lender
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Eligible Lender Trustee also agrees to disburse all moneys actually received
by it constituting part of the Trust Estate upon the terms of this Agreement and
the other Basic Documents. The Eligible Lender Trustee shall not be answerable
or accountable hereunder or under any other Basic Document under any
circumstances, except (i) for its own willful misconduct or negligence or (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.03 expressly made by the Eligible Lender Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Eligible Lender Trustee shall not be liable for any error of
judgment made by a responsible officer of the Eligible Lender Trustee;
(b) the Eligible Lender Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with the direction
or instructions of the Administrator or any Certificateholder;
(c) no provision of this Agreement or any other Basic Document shall
require the Eligible Lender Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document, if the Eligible Lender Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Eligible Lender Trustee be liable
for indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Eligible Lender Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate or for or in respect
of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Eligible Lender
Trustee shall in no event assume or incur any liability, duty, or obligation to
any Noteholder or to any Certificateholder, other than as expressly provided for
herein and in the other Basic Documents;
(f) the Eligible Lender Trustee shall not be liable for the action or
inaction, default or misconduct of the Administrator, the Seller, the Indenture
Trustee or the Master Servicer under any of the other Basic Documents or
otherwise and the Eligible Lender Trustee shall have no obligation or liability
to perform the obligations of the Trust under this Agreement or the other Basic
Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Master Servicer under the Master 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 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 satisfactory
to it against the costs, expenses and liabilities that may be incurred by the
Eligible Lender Trustee therein or thereby. The right of the Eligible Lender
Trustee to perform any discretionary act enumerated in this Agreement or in any
other Basic Document shall not be construed as a duty, and the Eligible Lender
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 7.02. FURNISHING OF DOCUMENTS. The Eligible Lender Trustee
shall furnish to the Certificateholders promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Eligible Lender Trustee under the Basic Documents.
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. The Eligible Lender
Trustee hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a national banking association duly organized and validly
existing in good standing under the laws of the United States and having an
office located within the State of New York. It has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
Federal or Delaware 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 and will maintain its status as an "eligible lender" (as
such term is defined in Section 435(d) of the Higher Education Act) for purposes
of holding legal title to the Financed Student Loans as contemplated by this
Agreement and the other Basic Documents, has obtained a lender identification
number with respect to the Financed Student Loans from the Department and has
and will maintain in effect a Guarantee Agreement with each of the Guarantors
with respect to the Financed Student Loans.
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL. (a) The Eligible Lender
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, direction, notice, resolution, request, consent, order, certificate,
report, opinion, bond, or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. The Eligible
Lender Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Eligible Lender Trustee may
for all purposes hereof rely on a certificate, signed by the president or any
vice president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Eligible Lender Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Basic Documents, the Eligible Lender Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Eligible Lender Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Eligible Lender Trustee with reasonable care, and (ii) may consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by it. The Eligible Lender Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and not contrary to this Agreement or any other Basic Document.
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article VII, in accepting the trusts hereby created, The First National
Bank of Chicago acts solely as Eligible Lender Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Eligible Lender
Trustee by reason of the transactions contemplated by this Agreement or any
other Basic Document shall look only to the Trust Estate for payment or
satisfaction thereof.
SECTION 7.06. ELIGIBLE LENDER TRUSTEE NOT LIABLE FOR TRUST
CERTIFICATES OR FINANCED STUDENT LOANS. The recitals contained herein and in the
Trust Certificates (other than the signature and countersignature of the
Eligible Lender Trustee on the Trust Certificates) shall be taken as the
statements of the Depositor and the Eligible Lender Trustee assumes no
responsibility for the correctness thereof. The Eligible Lender Trustee makes no
representations as to the validity or sufficiency of this Agreement, the Trust
Certificates or any other Basic Document (other than the signature and
countersignature of the Eligible Lender Trustee on the Trust Certificates) or
the Notes, or of any Financed Student Loan or related documents. The Eligible
Lender Trustee shall at no time have any responsibility (or liability except for
willfully or negligently terminating or allowing to be terminated any of the
Guarantee Agreements, in a case where the Eligible Lender Trustee knows of any
facts or circumstances which will or could reasonably be expected to result in
any such termination) for or with respect to the legality, validity,
enforceability and eligibility for Guarantee Payments, federal reinsurance,
Interest Subsidy Payments or Special Allowance Payments, as applicable, in
respect of any Financed Student Loan, or for or with respect to the sufficiency
of the Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including the existence and contents of any computer or other record of any
Financed Student Loan; the validity of the assignment of any Financed Student
Loan to the Eligible Lender Trustee on behalf of the Trust; the completeness of
any Financed Student Loan; the performance or enforcement (except as expressly
set forth in any Basic Document) of any Financed Student Loan; the compliance by
the Depositor or the 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 Administrator, the
Indenture Trustee or the Master Servicer or any subservicer taken in the name of
the Eligible Lender Trustee.
SECTION 7.07. ELIGIBLE LENDER TRUSTEE MAY OWN TRUST CERTIFICATES AND
NOTES. The Eligible Lender Trustee in its individual or any other capacity may
become the owner or pledgee of Trust Certificates or Notes and may deal with the
Depositor, the Administrator, the Indenture Trustee and the Master Servicer in
banking transactions with the same rights as it would have if it were not
Eligible Lender Trustee.
ARTICLE VIII
COMPENSATION OF ELIGIBLE LENDER TRUSTEE
SECTION 8.01. ELIGIBLE LENDER TRUSTEE'S FEES AND EXPENSES. The
Eligible Lender Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between the
Depositor and the Eligible Lender Trustee, and the Eligible Lender Trustee shall
be entitled to be reimbursed by the Depositor, to the extent provided in such
separate agreement, for its other reasonable expenses hereunder.
SECTION 8.02. PAYMENTS TO THE ELIGIBLE LENDER TRUSTEE. Any amounts
paid to the Eligible Lender Trustee pursuant to Section 8.01 hereof or pursuant
to Section 4.03 of the Sale Agreement or Section 5.03 of the Master Servicing
Agreement shall be deemed not to be a part of the Trust Estate immediately after
such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT. (a) This Agreement
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect upon the earlier of (i) the final distribution by the Eligible
Lender Trustee of all moneys or other property or proceeds of the Trust Estate
in accordance with the terms of the Indenture, the Master Servicing Agreement
and Article V of this Agreement and (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. The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall 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 8.01 of the Master Agreement, stating (i) the Distribution Date upon
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Certificate Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Certificate Paying Agent therein
specified. The Eligible Lender Trustee shall give such notice to the Certificate
Registrar (if other than the Eligible Lender Trustee) and the Certificate Paying
Agent at the time such notice is given to Certificateholders. Upon presentation
and surrender of the Trust Certificates, the Certificate Paying Agent shall
cause to be distributed to Certificateholders amounts distributable on such
Distribution Date pursuant to Section 5.01.
In the event that all the Certificateholders shall not surrender their
Trust Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Eligible Lender Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Eligible
Lender Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies and no later than
five years after the first such notice shall be distributed by the Eligible
Lender Trustee to the Depositor.
ARTICLE X
SUCCESSOR ELIGIBLE LENDER TRUSTEES AND ADDITIONAL
ELIGIBLE LENDER TRUSTEES
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR ELIGIBLE LENDER TRUSTEE.
The Eligible Lender Trustee shall at all times be a corporation or association
(i) qualifying as an "eligible lender" as such term is defined in Section 435(d)
of the Higher Education Act for purposes of holding legal title to the Financed
Student Loans on behalf of the Trust, with a valid lender identification number
with respect to the Trust from the Department; (ii) being authorized to exercise
corporate trust powers and hold legal title to the Financed Student Loans; (iii)
having in effect Guarantee Agreements with each of the Guarantors; (iv) being
subject to supervision or examination by Federal or state authorities; (v) being
incorporated or authorized to do business in the State of Delaware or which is a
national bank having an office located within the State of Delaware and
otherwise complying with Section 3807 of the Delaware Business Trust Act; and
(vi) having (or having a parent which has) a rating of at least investment grade
by the Rating Agencies. If the Eligible Lender Trustee shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of the Eligible Lender Trustee shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Eligible Lender
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Eligible Lender Trustee shall resign immediately in the manner and
with the effect specified in Section 10.02.
SECTION 10.02. RESIGNATION OR REMOVAL OF ELIGIBLE LENDER TRUSTEE. The
Eligible Lender Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Administrator. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Eligible Lender Trustee meeting the eligibility requirements of
Section 10.01 by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Eligible Lender Trustee and one copy to the
successor Eligible Lender Trustee. If no successor Eligible Lender Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Eligible Lender Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Eligible Lender Trustee; PROVIDED, HOWEVER, that such right to appoint or to
petition for the appointment of any such successor shall in no event relieve the
resigning Eligible Lender Trustee from any obligations otherwise imposed on it
under the Basic Documents until such successor has in fact assumed such
appointment.
If at any time the Eligible Lender Trustee shall cease to be eligible
in accordance with the provisions of Section 10.01 and shall fail to resign
after written request therefor by the Administrator, or if at any time an
Insolvency Event with respect to the Eligible Lender Trustee shall have occurred
and be continuing, then the Administrator may remove the Eligible Lender
Trustee. If the Administrator shall remove the Eligible Lender Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Eligible Lender 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 shall remit payment of all fees owed to the outgoing Eligible Lender
Trustee.
Any resignation or removal of the Eligible Lender Trustee and
appointment of a successor Eligible Lender Trustee pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Eligible Lender Trustee pursuant to Section 10.03
and payment of all fees and expenses owed to the outgoing Eligible Lender
Trustee. The Administrator shall provide notice of such resignation or removal
of the Eligible Lender Trustee to each of the Rating Agencies.
SECTION 10.03. SUCCESSOR ELIGIBLE LENDER TRUSTEE. Any successor
Eligible Lender Trustee appointed pursuant to Section 10.02 shall execute,
acknowledge and deliver to the Administrator and to its predecessor Eligible
Lender Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Eligible Lender
Trustee shall become effective and such successor Eligible Lender Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Eligible Lender Trustee.
The predecessor Eligible Lender Trustee shall upon payment of its fees and
expenses deliver to the successor Eligible Lender Trustee all documents,
statements, moneys and properties held by it under this Agreement and shall
assign, if permissible, to the successor Eligible Lender Trustee the lender
identification number obtained from the Department on behalf of the Trust; and
the Administrator and the predecessor Eligible Lender Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Eligible Lender
Trustee all such rights, powers, duties and obligations.
No successor Eligible Lender Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Eligible Lender Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Eligible Lender Trustee
pursuant to this Section, the Administrator shall mail notice of the succession
of such Eligible Lender Trustee to all Certificateholders, the Indenture
Trustee, the Noteholders and the Rating Agencies. If the Administrator shall
fail to mail such notice within 10 days after acceptance of appointment by the
successor Eligible Lender Trustee, the successor Eligible Lender Trustee shall
cause such notice to be mailed at the expense of the Administrator.
SECTION 10.04. MERGER OR CONSOLIDATION OF ELIGIBLE LENDER TRUSTEE. Any
corporation into which the Eligible Lender Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Eligible Lender Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Eligible Lender Trustee, shall, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, be the successor of the
Eligible Lender Trustee hereunder; PROVIDED that such corporation shall be
eligible pursuant to Section 10.01; and PROVIDED FURTHER that the Eligible
Lender Trustee shall mail notice of such merger or consolidation to the Rating
Agencies not less than 15 days prior to the effective date thereof.
SECTION 10.05. APPOINTMENT OF CO-ELIGIBLE LENDER TRUSTEE OR SEPARATE
ELIGIBLE LENDER TRUSTEE. Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Administrator and the Eligible Lender Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Eligible Lender Trustee, meeting the eligibility
requirements of clauses (i) through (iii) of Section 10.01, to act as
co-trustee, jointly with the Eligible Lender Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust Estate, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Eligible Lender
Trustee may consider necessary or desirable. If the Administrator shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Eligible Lender Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
clauses (iv) and (v) of Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed
upon the Eligible Lender Trustee shall be conferred upon and
exercised or performed by the Eligible Lender Trustee and such
separate trustee or co-trustee jointly (it being understood that
such separate trustee or co-trustee is not authorized to act
separately without the Eligible Lender Trustee joining in such
act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the
Eligible Lender Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, solely at the direction of the Eligible Lender
Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this
Agreement; and
(iii)the Administrator and the Eligible Lender Trustee acting jointly
may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Eligible Lender
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Eligible
Lender Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Eligible Lender Trustee. Each such instrument shall be filed
with the Eligible Lender Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Eligible Lender Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Eligible Lender Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS. This Agreement may be
amended by the Depositor and the Eligible Lender Trustee, with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders or
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
modifying in any manner the rights of the Noteholders or the Certificateholders;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor
and the Eligible Lender Trustee, upon the satisfaction of the Rating Agency
Condition, (i) with the consent of the Noteholders of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes and (ii) with the consent
of the Certificateholders of Certificates evidencing not less than a majority of
the Certificate Balance, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Financed Student Loans or distributions that shall be required to be
made for the benefit of the Noteholders or the Certificateholders or (b) reduce
the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance required to consent to any such amendment, without the
consent of all the outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent, the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement. The Eligible Lender Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Eligible Lender Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN CERTIFICATEHOLDERS.
The Certificateholders shall not have legal title to any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided beneficial ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their beneficial ownership interest in the Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the
Eligible Lender Trustee, the Depositor, the Certificateholders, the
Administrator and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement (other than Section
2.07), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.04. NOTICES. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Eligible Lender Trustee shall be deemed given only upon actual receipt by the
Eligible Lender Trustee), if to the Eligible Lender Trustee, addressed to its
Corporate Trust Office; if to the Depositor, addressed to First Union National
Bank, [ ] Attention: [ ], or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.06. SEPARATE COUNTERPARTS. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.07. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor and its successors, the Eligible Lender Trustee and its successors,
each Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.08. NO PETITION. (a) The Depositor will not at any time
institute against the Trust any bankruptcy proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
other Basic Documents.
(b) The Eligible Lender Trustee (not in its individual capacity but
solely as Eligible Lender Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the other Basic
Documents.
SECTION 11.09. NO RECOURSE. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Master Servicer, the Administrator, the
Eligible Lender Trustee, the Indenture Trustee or any Affiliate thereof or any
officer, director or employee of any thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Trust Certificates or the other Basic
Documents.
SECTION 11.10. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of 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>
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.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
By: ______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK, Depositor,
By:_______________________________________
Name:
Title:
<PAGE>
A-8
EXHIBIT A TO THE TRUST AGREEMENT
[FORM OF TRUST CERTIFICATE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Trust Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to the Issuer (as defined below) or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
THIS TRUST CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW). THIS CERTIFICATE IS NOT GUARANTEED OR INSURED
BY ANY GOVERNMENTAL AGENCY.
NUMBER $_________________________
R- CUSIP NO.
FIRST UNION STUDENT LOAN TRUST 1997-1
FLOATING RATE ASSET BACKED CERTIFICATE 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 First Union National Bank,
a national banking association having its main office in Avondale, Pennsylvania.
(This Trust Certificate does not represent an interest in or obligation of First
Union National Bank, the Master Servicer (as defined below), the Eligible Lender
Trustee (as defined below) or any of their respective affiliates, except to the
extent described below.)
THIS CERTIFIES THAT Cede & Co. is the registered owner of
______________________________________ dollars nonassessable, fully-paid,
fractional undivided interest in the First Union Student Loan Trust 1997-1 (the
"Trust"), a trust formed under the laws of the State of Delaware by First Union
National Bank, a national banking association (the "Depositor"). The Trust was
created pursuant to a Trust Agreement dated as of June 1, 1997 (the "Trust
Agreement"), between the Depositor and The First National Bank of Chicago, a
national banking association, not in its individual capacity but solely as
eligible lender trustee on behalf of the Trust (the "Eligible Lender Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in Appendix A to the Trust Agreement; such
Appendix A also contains rules as to usage that shall be applicable herein.
This Certificate is one of the duly authorized Certificates designated
as "Floating Rate Asset Backed Certificates" (herein called the "Trust
Certificates"). Issued under the Indenture dated as of June 1, 1997, between the
Trust and Bankers Trust Company, as Indenture Trustee, are Notes designated as
"Floating Rate Asset Backed Notes" (the "Notes"). This Trust Certificate is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Trust Certificate by
virtue of the acceptance hereof assents and by which such holder is bound. The
property of the Trust includes a pool of guaranteed student loans (the "Financed
Student Loans"), all moneys paid thereunder on or after June 1, 1997, certain
bank accounts and the proceeds thereof and certain other rights under the Trust
Agreement and the Master Servicing Agreement and all proceeds of the foregoing.
The rights of the holders of the Trust Certificates to the assets of the Trust
are subordinated to the rights of the holders of the Notes, as set forth in the
Basic Documents.
Under the Trust Agreement, to the extent of funds available therefor,
interest on the Certificate Balance of this Trust Certificate at the Certificate
Rate, and principal and certain other amounts will be distributed on the [ ] day
of each March, June, September and December (or, if such [ ] day is not a
Business Day, the next succeeding Business Day) (each a "Distribution Date"),
commencing on September __, 1997, to the person in whose name this Trust
Certificate is registered at the close of business on the [ ] day of the
calendar month in which such Distribution Date occurs (the "Record Date"), in
each case to the extent of such Certificateholder's fractional undivided
interest in the amount or amounts to be distributed to Certificateholders on
such Distribution Date pursuant to the Master Servicing Agreement.
The Certificate Rate for each Interest Period shall be equal to the
lesser of (a) the T-Bill Rate for such Interest Period plus ____% and (b) the
Student Loan Rate for such Interest Period. The "Student Loan Rate" for any
Accrual Period shall equal the product of (a) the quotient obtained by dividing
(i) 365 (or 366 in a leap year) by (ii) the actual number of days elapsed in
such Interest Period and (b) the percentage equivalent of a fraction, (i) the
numerator of which is equal to Expected Interest Collections for the related
Collection Period relating to such Interest Period less the Trust Fees payable
on the related Distribution Date and any Servicing Fees paid on the two
preceding monthly Servicing Payment Dates during the related Collection Period
and (ii) the denominator of which is the outstanding principal balance of the
Securities as of the first day of such Interest Period.
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 Master Servicing Agreement
and the Indenture.
It is the intent of the Depositor, the Master Servicer, the
Administrator, the Certificateholders and the Certificate Owners that, for
purposes of Federal income, state and local income and franchise and any other
income taxes, the Trust will be treated as a partnership and the
Certificateholders (including the Depositor in its capacity as recipient of
distributions from the Reserve Account) will be treated as partners in that
partnership. The Certificateholders by acceptance of a Trust Certificate (and
the Certificate Owners by acceptance of a beneficial interest in a Trust
Certificate), agree to treat, and to take no action inconsistent with the
treatment of, the Trust Certificates for such tax purposes as partnership
interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial interest
in a Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Seller or the Trust, or join in any institution against the Seller or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency, receivership
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Trust Certificates, the Notes, the Trust Agreement or any of the other
Basic Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Eligible Lender Trustee by wire transfer or by check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency, unless
Definitive Certificates have been issued (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Trust Certificate will be made after due notice by the Eligible Lender Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Trust Certificate at the office or agency maintained for the purpose by the
Eligible Lender Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Eligible Lender Trustee or its
authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the Master
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
FIRST UNION STUDENT LOAN TRUST 1997-1,
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely as
Eligible Lender Trustee.
By: ________________________________________
Authorized Signatory
Date: _________, 1997
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By:_____________________________________
Authorized Signatory
Date: _________, 1997
<PAGE>
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Master, the Administrator, the Eligible Lender
Trustee or any affiliates of any of them, and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated herein, in the Trust Agreement or in the other Basic Documents. In
addition, this Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Financed Student Loans, all as more specifically set forth in the
Master Servicing Agreement. A copy of each of the Master 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
Depositor 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 holders of the Notes and the Trust Certificates each voting as a class
evidencing not less than a majority of the outstanding principal balance of the
Notes and the Certificate Balance. Any such consent by the holder of this Trust
Certificate shall be conclusive and binding on such holder and on all future
holders of this Trust Certificate and of any Trust Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Trust Certificate. The Trust Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by The First National Bank of
Chicago, in its capacity as Certificate Registrar, or by any successor
Certificate Registrar, in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Eligible Lender Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $1,000 or in integral multiples
of $1,000 in excess thereof; PROVIDED, HOWEVER, that the Excess Distribution
Certificate issued to the Depositor shall be issued in such denomination as to
include any residual amount of the Initial Certificate Balance. As provided in
the Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Eligible Lender Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Eligible Lender Trustee, the Certificate Registrar and any agent
of the Eligible Lender Trustee or the Certificate Registrar may treat the person
in whose name this Trust Certificate is registered as the owner hereof for all
purposes, and none of the Eligible Lender Trustee or the Certificate Registrar
or any such agent shall be affected by any notice to the contrary.
This Trust Certificates and any beneficial interest herein may not be
acquired by or with the assets of a Benefit Plan Investor. Each transferee of a
this Certificate shall be required to represent (or, in the case of a transferee
of a beneficial interest in a Book Entry Certificate, shall be deemed to
represent) (a) that it is not a Benefit Plan Investor and is not acquiring this
Certificate with the assets of a Benefit Plan Investor and (b) that if this
Trust Certificate is subsequently deemed to be a plan asset, it will dispose of
this Trust Certificate. Any transfer of this Trust Certificate or any beneficial
interest herein in violation of the foregoing restrictions shall be null and
void and shall vest no rights in the transferee.
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 Master Servicing Agreement and the disposition of all
property held as part of the Trust. The Depositor may at its option purchase the
corpus of the Trust at a price specified in the Master Servicing Agreement, and
such purchase of the Financed Student Loans and other property of the Trust will
effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable only on any Distribution Date on or after the date on
which the Pool Balance is less than or equal to 5% of the Initial Pool Balance.
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 "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in Security Transfer Agent's Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
- -------------------------------------------------------------------------------
MASTER SERVICING AGREEMENT
among
FIRST UNION STUDENT LOAN TRUST 1997-1
as Issuer,
FIRST UNION NATIONAL BANK
as Master Servicer and Administrator,
AND
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but solely
as Eligible Lender Trustee,
Dated as of June 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
MASTER SERVICING AGREEMENT, dated as of June 1, 1997, among FIRST
UNION STUDENT LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"), FIRST
UNION NATIONAL BANK ("First Union"), a national banking association with its
principal place of business in Charlotte, North Carolina, as master servicer and
administrator (in its respective capacities, the "Master Servicer" and the
"Administrator"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, solely as eligible lender trustee and not in its individual
capacity (the "Eligible Lender Trustee").
WHEREAS, the Eligible Lender Trustee will acquire certain student
loans to be held in the Trust formed pursuant to a trust agreement (the "Trust
Agreement"), dated as of June 1, 1997, between First Union National Bank, a
separate national banking association with its principal place of business in
Avondale, Pennsylvania, as Seller, and the Eligible Lender Trustee;
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to an
indenture (the "Indenture"), dated as of June 1, 1997, between the Issuer and
the Indenture Trustee and trust certificates (the "Certificates") pursuant to
the Trust Agreement, which Notes and Certificates are payable from the assets of
the Issuer;
WHEREAS, the Issuer, the Administrator and the Eligible Lender Trustee
desire the Master Servicer to service said student loans held by the Eligible
Lender Trustee on behalf of the Issuer, and the Master Servicer is willing to
service said student loans for the Issuer, the Administrator, the Eligible
Lender Trustee and the Indenture Trustee; and
WHEREAS, the Administrator is willing to undertake certain
administrative functions with respect to said student loans;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. Definitions and Usage. Capitalized terms used but not
defined herein are defined in Appendix A to the Indenture, which also contains
rules as to usage and construction that shall be applicable herein.
ARTICLE II
THE FINANCED STUDENT LOANS
SECTION 2.01. Custody of Financed Student Loan Files. The Issuer
hereby revocably appoints the Master Servicer, and the Master Servicer hereby
accepts such appointment, to act for the benefit of the Issuer and the Indenture
Trustee as custodian of the following documents or instruments (collectively,
the "Financed Student Loan Files") which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer with respect to each Financed
Student Loan:
(a) the original fully executed copy of the note evidencing the
Financed Student Loan;
(b) the original loan application fully executed by the borrower; and
(c) any and all other documents and computerized records that any of
the Master Servicer, the Administrator or the Seller shall keep on file, in
accordance with its customary procedures, relating to such Financed Student Loan
or any Obligor with respect thereto.
SECTION 2.02. Duties of Master Servicer as Custodian. (a) Safekeeping. The
Master Servicer shall hold the Financed Student Loan Files for the benefit of
the Issuer and the Indenture Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to each Financed Student Loan
File as shall enable the Issuer to comply with this Agreement. In performing its
duties as custodian the Master Servicer shall act with reasonable care, using
that degree of skill and attention that the Master Servicer exercises with
respect to the student loan files relating to all comparable student loans that
the Master Servicer services and shall ensure that it complies fully and
completely with all applicable Federal and State laws, including the Higher
Education Act, with respect thereto. The Master Servicer shall take all actions
necessary with respect to the Financed Student Loan Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer, the Administrator or the Indenture Trustee to
verify the accuracy of the Master Servicer's record keeping with respect to the
Master Servicer's obligations as custodian hereunder. The Master Servicer shall
promptly report to the Issuer, the Administrator 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
maintain each Financed Student Loan File at one of its offices or the offices of
any subservicers appointed pursuant to Section 3.13 specified in Schedule B to
this Agreement or at such other office as shall be specified by written notice
to the Issuer and the Indenture Trustee not later than 90 days after any change
in location. Upon reasonable prior notice, the Master Servicer shall make
available to the Issuer and the Indenture Trustee or their respective duly
authorized representatives, attorneys or auditors a list of locations of the
Financed Student Loan Files and access to the related accounts, records and
computer systems maintained by the Master Servicer at such times during normal
business hours as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture Trustee,
the Master Servicer shall release any Financed Student Loan File to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable. The Indenture Trustee shall cooperate
with the Master Servicer to provide the Master Servicer with access to the
Financed Student Loan Files in order for the Master Servicer to continue to
service the Financed Student Loans after the release of the Financed Student
Loan Files. In the event the Master Servicer is not provided access to the
Financed Student Loan Files, the Master Servicer shall not be deemed to have
breached its obligations pursuant to Sections 2.01 or 2.02 if it is unable to
perform such obligations due to its inability to have access to the Financed
Student Loans Files. The Master Servicer shall not be liable for any losses with
respect to the servicing of such Financed Student Loan Files to the extent the
losses are attributable to the Master Servicer's inability to access the related
Financed Student Loan Files.
SECTION 2.03. Reserved.
SECTION 2.04. Effective Period and Termination. First Union's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect for so long as First Union shall remain the
Master Servicer hereunder. If First Union 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 First Union or any such successor Master
Servicer shall have been terminated under Section 7.01, the appointment of First
Union or such successor Master Servicer as custodian shall be terminated
simultaneously with the effectiveness of such resignation or termination. On or
after the effective date of any resignation or any termination of such
appointment, the Master Servicer shall deliver the Financed Student Loan Files
in its possession to the successor Master Servicer, the Indenture Trustee or the
Indenture Trustee's agent, at the direction of the Indenture Trustee, at such
place or places as the Indenture Trustee may reasonably designate.
ARTICLE III
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 3.01. 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, using that degree of skill and attention that the Master Servicer
exercises with respect to all comparable student loans that it services. Without
limiting the generality of the foregoing or of any other provision set forth in
this Agreement and notwithstanding any other provision to the contrary set forth
herein, the Master Servicer shall manage, service, administer and make
collections with respect to the Financed Student Loans (including collection of
any Interest Subsidy Payments and Special Allowance Payments on behalf of the
Eligible Lender Trustee) in accordance with, and otherwise comply with, all
applicable Federal and state laws, including all applicable standards,
guidelines and requirements of the Higher Education Act and the applicable
Guarantee Agreement, the failure to comply with which would adversely affect the
eligibility of one or more of the Financed Student Loans for federal reinsurance
or Interest Subsidy Payments or Special Allowance Payments or for receipt of
Guarantee Payments.
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 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 3.02, the Master Servicer shall follow its 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, provided that the Master Servicer may
write off any delinquent Financed Student Loan if the remaining balance of the
borrower's account is less than $50, or (b) reschedule, revise, defer or
otherwise compromise with respect to payments due on any Financed Student Loan
except pursuant to any applicable interest only, deferral or forbearance periods
or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of the Financed Student Loans;
provided, further, 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 in accordance with the applicable standards,
guidelines and requirements of the Higher Education Act or the applicable
Guarantee Agreement. The Eligible Lender Trustee on behalf of the Issuer hereby
grants a power of attorney and all necessary authorization to the Master
Servicer to maintain any and all collection procedures with respect to the
Financed Student Loans, including filing, pursuing and recovering claims against
the Guarantors for Guarantee Payments and with the Department for Interest
Subsidy Payments and Special Allowance 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 execute and deliver to the Master Servicer
or the Administrator any other powers of attorney and other documents delivered
to each of them reasonably necessary or appropriate to enable the Master
Servicer or the Administrator to carry out their servicing and administrative
duties hereunder.
SECTION 3.02. 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) to collect
all payments called for under the terms and provisions of the Financed Student
Loans as and when the same shall become due and shall follow such collection
procedures as it follows with respect to all comparable student loans that it
services. The Master Servicer shall allocate collections with respect to the
Financed Student Loans between principal and interest in accordance with Section
4.03. The Master Servicer may in its discretion waive any late payment charge or
any other fees that may be collected in the ordinary course of servicing a
Financed Student Loan.
(b) The Master Servicer shall make reasonable efforts to claim, pursue
and collect all Guarantee Payments from the Guarantors pursuant to the Guarantee
Agreements with respect to any of the Financed Student Loans as and when the
same shall become due and payable, shall comply with all applicable laws and
agreements with respect to claiming, pursuing and collecting such payments and
shall follow such practices and procedures as it follows with respect to all
comparable guarantee agreements and student loans that it services. In
connection therewith, the Master Servicer is hereby authorized and empowered to
convey to any Guarantor the note and the related Financed Student Loan File
representing any Financed Student Loan in connection with submitting a claim to
such Guarantor for a Guarantee Payment in accordance with the terms of the
applicable Guarantee Agreement. All amounts so collected by the Master Servicer
shall constitute Available Funds for the applicable Collection Period and shall
be deposited into the Collection Account. 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 necessary or appropriate to
enable the Master Servicer to convey such documents to any Guarantor and to make
such claims.
(c) The Master Servicer, on behalf of the Eligible Lender Trustee,
shall make reasonable efforts to claim, pursue and collect all Interest Subsidy
Payments and Special Allowance Payments from the Department with respect to any
of the Financed Student Loans as and when the same shall become due and payable,
shall comply with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as the Master Servicer follows with respect to its own student loans.
All amounts so collected by the Eligible Lender Trustee shall constitute
Available Funds for the applicable Collection Period and shall be deposited into
the Collection Account in accordance with Section 4.02. In connection therewith,
the Master Servicer shall prepare and file with the Department on a timely basis
all claims forms and other documents and filings necessary or appropriate in
connection with the claiming of Interest Subsidy Payments and Special Allowance
Payments on behalf of the Eligible Lender Trustee and shall otherwise assist the
Eligible Lender Trustee in pursuing and collecting such Interest Subsidy
Payments and Special Allowance Payments from the Department. The Eligible Lender
Trustee shall, upon the written request of the 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.
The Eligible Lender Trustee may permit trusts established by the
Seller, other than the Trust, to securitize student loans to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
consolidation fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the 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. If so specified in the servicing agreement applicable to any such other
trust, any amounts assessed against payments due from the Department or any
Guarantor to the Trust as a result of amounts owing to the Department or any
Guarantor from such other trust using such common lender identification number
will be deemed to have been assessed against such other trust and will be
deducted by the Eligible Lender Trustee or the 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 3.03. Realization Upon Financed Student Loans. For the benefit
of the Issuer, the Master Servicer shall use reasonable efforts consistent with
its customary servicing practices and procedures and including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement in
its servicing of any delinquent Financed Student Loans.
SECTION 3.04. Computation of Note Interest Rate and Certificate Rate.
Prior to each Determination Date, the Administrator shall determine the Note
Interest Rate and the Certificate Rate that will be applicable to the
Distribution Date following such Determination Date, in compliance with its
obligation to prepare and deliver an Administrator's Certificate on such
Determination Date pursuant to Section 3.08. In connection therewith, the
Administrator shall calculate the T-Bill Rate in accordance with the definition
thereof and shall also determine the Student Loan Rate with respect to such
Distribution Date.
SECTION 3.05. No Impairment. The Master Servicer shall not impair the
rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or Noteholders in such Financed Student Loans.
SECTION 3.06. Purchase Of Financed Student Loans; Reimbursement. The
Master Servicer or the Eligible Lender Trustee shall inform the other party as
well as the Indenture Trustee and the Seller promptly, in writing, upon the
discovery of any breach pursuant to Section 3.01, 3.02, 3.03 or 3.05. Unless the
breach shall have been cured within 120 days following such discovery (or, at
the Master Servicer's election, the last day of the first month following such
discovery), the Master Servicer shall purchase any Financed Student Loan in
which the interests of the Noteholders or the Certificateholders are materially
and adversely affected by such breach as of the first day succeeding the end of
such 120-day period that is the last day of a Collection Period (it being
understood that any such breach that does not affect any Guarantor's obligation
to guarantee payment of such Financed Student Loan will not be considered to
have a material adverse effect for this purpose). If the Master Servicer takes
any action or fails to take any action during any Collection Period pursuant to
the sections referred to above that impairs the rights of the Issuer, the
Indenture Trustee, the Eligible Lender Trustee, the Certificateholders or the
Noteholders in any Financed Student Loan or otherwise than as provided in such
sections, the Master Servicer shall purchase such Financed Student Loan as of
the last day of such Collection Period. In consideration of the purchase of any
such Financed Student Loan pursuant to either of the two preceding sentences,
the Master Servicer shall remit the Purchase Amount in the manner specified in
Section 4.04. In addition, if any such breach by the Master Servicer does not
trigger such a purchase obligation but does result in the refusal by a Guarantor
to guarantee all or a portion of the accrued interest, or the loss (including
any obligation of the Issuer to repay to the Department) of certain Interest
Subsidy Payments and Special Allowance Payments, with respect to a Financed
Student Loan, then, unless such breach, if curable, is cured within 120 days,
the Master Servicer shall reimburse the Issuer by remitting an amount equal to
the sum of all such non-guaranteed interest amounts and such forfeited Interest
Subsidy Payments and Special Allowance Payments in the manner specified in
Section 4.04. The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders with respect to a
breach pursuant to Section 3.01, 3.02, 3.03 or 3.05 shall be to require the
Master Servicer to purchase Financed Student Loans or to reimburse the Issuer as
provided above pursuant to this Section 3.06. 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 3.06. The Master
Servicer shall not be deemed to have breached its obligations pursuant to
Section 3.01, 3.02, 3.03 or 3.05 if it is rendered unable to perform such
obligations, in whole or in part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes, hurricanes,
floods and other disasters). The Master Servicer shall diligently perform its
duties under this Agreement as soon as practicable following the termination of
such interruption of business.
SECTION 3.07. Servicing Fee, Excess Servicing Fee. The Servicing Fee
for each calendar month and any Distribution Date and any Excess Servicing Fees
payable on any Distribution Date shall be equal to the amounts determined by
reference to the schedule of fees attached hereto as Schedule C. Notwithstanding
anything to the contrary contained herein or in any other Basic Document, the
Master Servicer shall only be entitled to receive any Excess Servicing Fee on
any Distribution Date if and to the extent that sufficient funds are available
pursuant to Section 4.05(c)(ix) or 4.06(e)(A).
SECTION 3.08. Administrator's Certificate; Master Servicer's Report.
(a) On or before the fifteenth day of each month (or, if any such day is not a
Business Day, on the next succeeding Business Day), the Master Servicer shall
deliver to the Administrator a Master Servicer's Report with respect to the
preceding calendar month containing all information necessary for the
Administrator to receive in connection with the preparation of the
Administrator's Certificate covering such calendar month referred to in
paragraphs (b) and (c) below.
(b) On each Determination Date prior to a Monthly Servicing Payment
Date that is not a Distribution Date, the Administrator shall deliver to the
Eligible Lender Trustee, the Indenture Trustee and (if the Seller is not the
Administrator) the Seller, an Administrator's Certificate containing all
information necessary to pay the Master Servicer the Servicing Fee due on such
Monthly Servicing Payment Date pursuant to Sections 4.05(b) and 4.06.
(c) On each Determination Date prior to a Distribution Date, the
Administrator shall deliver to the Eligible Lender Trustee, the Indenture
Trustee and (if the Seller is not the Administrator) the Seller, with a copy to
the Rating Agencies, an Administrator's Certificate containing all information
necessary to make the distributions pursuant to Sections 4.05 and 4.06 for the
Collection Period preceding the date of such Administrator's Certificate.
Financed Student Loans to be repurchased by the Seller, purchased by the Master
Servicer or acquired by any Guarantor shall be identified by the Administrator
by type of loan and borrower social security number with respect to such
Financed Student Loan (as specified in Schedule A).
SECTION 3.09. Annual Statement as to Compliance; Notice of Default.
(a) Each of the Master Servicer and the Administrator shall deliver to the
Seller, the Eligible Lender Trustee and the Indenture Trustee, on or before
April 30 of each year beginning April 30, 1998, 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, 1997) and of its performance under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Master Servicer or
the Administrator, as the case may be, has fulfilled all its obligations under
this Agreement, or under this Agreement and the Administration Agreement,
respectively, throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Indenture Trustee shall send a
copy of each such Officer's Certificate and each report referred to in Section
3.10 to the Rating Agencies. A copy of each such Officer's Certificate and each
report referred to in Section 3.10 may be obtained by any Certificateholder,
Certificate Owner, Noteholder or Note Owner by a request in writing to the
Eligible Lender Trustee addressed to its Corporate Trust Office, together with
evidence satisfactory to the Eligible Lender Trustee that such Person is one of
the foregoing parties. Upon the telephone request of the Eligible Lender
Trustee, the Indenture Trustee will promptly furnish the Eligible Lender Trustee
a list of Noteholders as of the date specified by the Eligible Lender Trustee.
(b) The Master Servicer shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Seller and the Rating Agencies, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice in an 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 7.01(a)(1) or (2).
(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 7.01(b)(1) or (2) or
would cause First Union to fail to meet any Rating Agency Condition pursuant to
Section 4.02(iii).
SECTION 3.10. Annual Independent Certified Public Accountant's Report.
Each of the Master Servicer and the Administrator shall cause a firm of
independent certified public accountants, which may also render other services
to the Master Servicer or the Administrator, as the case may be, to deliver to
the Seller, the Eligible Lender Trustee and the Indenture Trustee on or before
April 30 of each year beginning April 30, 1998, a report addressed to the Master
Servicer or the Administrator, as the case may be, and to the Seller, the
Eligible Lender Trustee and the Indenture Trustee, to the effect that such firm
has examined certain documents and records relating to the servicing of the
Financed Student Loans, or the administration of the Financed Student Loans and
of the Trust, as the case may be, during the preceding calendar year (or, in the
case of the first such report, during the period from the Closing Date to
December 31, 1997) and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration was conducted in compliance with
the terms of this Agreement and the Administration Agreement, as the case may
be, including any applicable statutory provisions incorporated therein, and such
additional terms and statutes as may be specified from time to time by the
Administrator, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report.
Such report will also indicate that the firm is independent of the
Master Servicer or the Administrator, as the case may be, within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 3.11. Access to Certain Documentation and Information
Regarding Financed Student Loans. Upon reasonable prior notice, the Master
Servicer shall provide to the Certificateholders and the Noteholders access to
the Financed Student Loan Files in such cases where the Certificateholders or
the Noteholders shall be required by applicable statutes or regulations to
review such documentation, as demonstrated by evidence satisfactory to the
Master Servicer in its reasonable judgment. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the respective offices of the Master Servicer. Nothing in this Section shall
affect the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Master Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
SECTION 3.12. Master Servicer and Administrator Expenses. Each of the
Master Servicer and the Administrator shall be severally required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Master
Servicer or the Administrator, as the case may be, and expenses incurred in
connection with distributions and reports to the Administrator or to the
Certificateholders and the Noteholders, as the case may be; [provided, however,
the Excess Servicing Fee will be subject to increase agreed to by the
Administrator, the Eligible Lender Trustee and the Master Servicer to the extent
that a demonstrable and significant increase occurs in the costs incurred by the
Master Servicer in providing the services to be provided hereunder, whether due
to changes in applicable governmental regulations, Guarantor program
requirements or regulations or postal rates].
SECTION 3.13. Appointment of Subservicers. (a) The Master Servicer may
at any time enter into subservicing agreements to provide for the performance by
third parties of all or any portion of its obligations as Master Servicer
hereunder; provided, however, that any applicable Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, 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 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 subservicers 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 the subservicers shall be as agreed between the Master Servicer and
its subservicers from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders shall
have any responsibility therefor. In no event shall the Trust Estate bear any
termination fee required to be paid to any subservicer as a result of such
subservicer's termination under any subservicing agreement. With respect to
satisfying the Rating Agency Condition referred to above, the term "subservicer"
shall be deemed not to include systems providers, systems developers or systems
maintenance contractors, collection agencies, credit bureaus, lock box
providers, mail service providers and other similar types of service providers.
References in this Agreement to actions taken or to be taken by the Master
Servicer include actions taken or to be taken by a subservicer on behalf of the
Master Servicer.
[(b) In addition, the Master Servicer may at any time enter into
subservicing agreements to provide for the performance by third parties of all
or any portion of its obligations as Master Servicer hereunder; provided that,
in each case, the subservicing agreement: (i) is consistent with this Agreement
in all material respects; (ii) provides that if the Master Servicer shall for
any reason no longer act in such capacity hereunder (including, without
limitation, by reason of a Master Servicer Default), the Indenture Trustee or
its designee may thereupon assume all of the rights and, except to the extent
they arose prior to the date of assumption, obligations of the Master Servicer
under such agreement, or, alternatively, may act in accordance with Section 7.02
hereof under the circumstances described therein; (iii) provides that the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders
shall be a third party beneficiary under such agreement, but that (except to the
extent the Indenture Trustee or its designee assumes the obligations of the
Master Servicer thereunder as contemplated by the immediately preceding clause
(ii)) none of the Trust, the Indenture Trustee, any successor Master Servicer,
any Noteholder or any Certificateholder shall have any duties under such
agreement or any liabilities arising therefrom; (iv) permits any purchaser of a
Financed Student Loan pursuant to this Agreement to terminate such agreement
with respect to such purchased Financed Student Loan at its option and without
penalty; (v) does not permit the subservicer to enter into or consent to any
modification, waiver or amendment or otherwise take any action on behalf of the
Master Servicer contemplated by Section 3.01 or Section 3.02 without the consent
of such Master Servicer; and (vi) does not permit the subservicer any direct
rights of indemnification that may be satisfied out of the Trust Estate. The
Master Servicer shall deliver to the Indenture Trustee copies of all
subservicing agreements, and any amendments thereto and modifications thereof,
entered into by it promptly upon its execution and delivery of such documents.
For purposes of this Agreement, the Master Servicer shall be deemed to have
received any payment when a subservicer retained by it receives such payment.
The Master Servicer shall notify the Indenture Trustee and the Seller in writing
promptly of the appointment by it of any subservicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Indenture Trustee, the Noteholders and the
Certificateholders, shall (at no expense to the Indenture Trustee, the
Noteholders, the Certificateholders or the Trust) monitor the performance and
enforce the obligations of each subservicer under the related subservicing
agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of subservicing agreements in accordance with
their respective terms and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer would require were it the owner of the Financed Student Loans. The
Master Servicer shall have the right to remove a subservicer retained by it in
accordance with the terms of the related subservicing agreement.
(d) In the event the Indenture Trustee or its designee assumes the
rights and obligations of the Master Servicer under any subservicing agreement,
the Master Servicer at its expense shall, upon request of the Indenture Trustee,
deliver to the assuming party all documents and records relating to such
subservicing agreement and the Financed Student Loans then being serviced
thereunder and an accounting of amounts collected and held on behalf of it
thereunder, and otherwise use reasonable efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
(e) The Indenture Trustee shall furnish to any subservicer any powers
of attorney and other documents necessary or appropriate to enable such
subservicer to carry out its servicing and administrative duties under any
subservicing agreement; provided, however, that the Indenture Trustee shall not
be held liable for any negligence with respect to, or misuse of, any such power
of attorney by a subservicer.]
SECTION 3.14. Covenants and Agreements of the Issuer, Administrator,
Eligible Lender Trustee and Master Service. The Issuer, the Administrator, the
Master Servicer and the Eligible Lender Trustee each agree that:
(a) Any payment and any communications received at any time by the
Issuer, the Administrator and the Eligible Lender Trustee (to the extent it can
be determined from the contents of such notice that the student loan referenced
is a Financed Student Loan) with respect to a Financed Student Loan shall be
immediately transmitted to the Master Servicer. Such communications shall
include, but not be limited to, requests or notices of loan cancellation,
notices of borrower disqualification, letters, changes in address or status,
notices of death or disability, notices of bankruptcy and forms requesting
deferment of repayment or forbearance.
(b) The Master Servicer may, in its discretion, if requested by a
borrower of a Financed Student Loan, arrange for the sale of such Financed
Student Loan to another lender which holds another student loan of such borrower
at a price not less than the Purchase Amount.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.01. Establishment Of Trust Accounts. (a) (i) The
Administrator, for the benefit of the Issuer, shall establish and maintain in
the name of the Indenture Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Issuer. The Collection Account will
initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of the Indenture Trustee.
(ii) The Administrator, for the benefit of the Issuer, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Issuer. The Reserve Account
will initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of the Indenture Trustee.
(b) Funds on deposit in the Collection Account and the Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Indenture Trustee
(or any custodian or designated agent with respect to any amounts on deposit in
such accounts) in Eligible Investments pursuant to written instructions by the
Administrator; provided, however, it is understood and agreed that the Indenture
Trustee shall not be liable for any loss arising from such investment in
Eligible Investments. All such Eligible Investments shall be held by (or by any
custodian on behalf of) the Indenture Trustee for the benefit of the Issuer;
provided that on the Business Day preceding each Distribution Date or the next
Monthly Servicing Payment Date (to the extent of the Servicing Fee due on such
date) all interest and other investment income (net of losses and investment
expenses) on funds on deposit therein shall be deposited into the Collection
Account and shall be deemed to constitute a portion of the Available Funds for
such Distribution Date or the next Monthly Servicing Payment Date, as
applicable. Other than as described in the following proviso or as otherwise
permitted by the Rating Agencies, funds on deposit in the Trust Accounts shall
be invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day preceding the following
Distribution Date or the next Monthly Servicing Payment Date (to the extent of
the Servicing Fee due on such date); provided, however, that funds on deposit in
Trust Accounts may be invested in Eligible Investments of the Indenture Trustee
which may mature so that such funds will be available on such Distribution Date.
Funds deposited in a Trust Account on a Business Day which immediately precedes
a Distribution Date or the next Monthly Servicing Payment Date (to the extent of
the Servicing Fee due on such date) upon the maturity of any Eligible
Investments are not required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. Subject to
the Administrator's power to instruct the Indenture Trustee pursuant to
paragraph (b) above and paragraph (c)(iii) below, the Trust Accounts shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Issuer. If, at any time, any of the Trust Accounts ceases to be an Eligible
Deposit Account, the Indenture Trustee (or the Administrator on its behalf)
agrees, by its acceptance hereto, that it shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Trust Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Trust Account. In
connection with the foregoing, the Administrator agrees that, in the event that
any of the Trust Accounts are not accounts with the Indenture Trustee, the
Administrator shall notify the Indenture Trustee in writing promptly upon any of
such Trust Accounts ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts, subject to the last
sentence of Section 4.01(c)(i); and, subject to Section 4.01(b), each such
Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be Delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely for
the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be Delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be Delivered to the Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained by
the Indenture Trustee, pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security.
(iii) The Administrator shall have the power, revocable for cause or
upon the occurrence and during the continuance of an Administrator Default
by the Indenture Trustee or by the Eligible Lender Trustee with the consent
of the Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Master Servicer, the Administrator or the Eligible Lender
Trustee to carry out its respective duties hereunder or permitting the
Indenture Trustee to carry out its duties under the Indenture.
SECTION 4.02. Collections. The Master Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Financed Student Loans (other than
Purchased Student Loans), and all Liquidation Proceeds, both as collected during
the Collection Period. Notwithstanding the foregoing, for so long as (i) First
Union remains the Administrator, (ii) no Administrator Default shall have
occurred and be continuing and (iii) prior to ceasing daily remittances to the
Collection Account, the Rating Agency Condition shall have been satisfied (and
any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Master Servicer shall remit such collections
within two Business Days of receipt thereof to the Administrator, and the
Administrator need not deposit such collections into the Collection Account
until one Business Day immediately prior to the next following Distribution
Date; provided, however, that, notwithstanding the foregoing, on or before the
Business Day preceding each Monthly Servicing Payment Date that is not a
Distribution Date, the Administrator shall deposit into the Collection Account
that portion of such amounts received by it that is equal to the Servicing Fee
payable on such date. In the event that any of the foregoing conditions for
ceasing daily remittances shall no longer be satisfied, then the Administrator
shall deposit all collections held by it into the Collection Account within five
Business Days thereof. For purposes of this Article IV, the phrase "payments by
or on behalf of Obligors" shall mean payments made with respect to the Financed
Student Loans by or on behalf of borrowers thereof and the Guarantors (but
excluding the Department).
SECTION 4.03. Application of Collections. (a) With respect to each
Financed Student Loan, all collections (including all Guarantee Payments) with
respect thereto for the Collection Period shall be applied to interest and
principal on such Financed Student Loan by the Master Servicer in accordance
with its customary practice by allocating to interest (i) any late payment
charge or any similar fee received with respect to such Financed Student Loan
and (ii) the portion of such collection equal to the product of (A) the
applicable interest rate on such Financed Student Loan, (B) the unpaid principal
balance of such Financed Student Loan and (C) the period of time elapsed since
the preceding payment of interest on such Financed Student Loan was made (over
the actual number of days in a year) ("Interest Collections") and by allocating
the remainder of such collection to principal.
(b) All Liquidation Proceeds not received in connection with a sale or
other transfer of a Financed Student Loan shall be applied to the related
Financed Student Loan.
SECTION 4.04. Additional Deposits. (a) Within two Business Days after
receipt thereof, the Eligible Lender Trustee shall deposit in the Collection
Account the aggregate amount of Interest Subsidy Payments and Special Allowance
Payments received by it with respect to the Financed Student Loans. 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 3.06 when such amounts
are due, and the Seller shall deposit or cause to be deposited therein the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Seller under the Sale Agreement when such amounts are
due.
(b) Notwithstanding anything to the contrary set forth in paragraph
(a) above, if daily deposits to the Collection Account are not required pursuant
to Section 4.02, the Eligible Lender Trustee, the Seller and the Master Servicer
shall pay the amounts referred to in paragraph (a) above that would otherwise be
deposited into the Collection Account to the Administrator. The Administrator
shall not be required to deposit such amounts into the Collection Account until
the Business Day preceding each Distribution Date; provided, however, that, on
or before the Business Day preceding each Monthly Servicing Payment Date that is
not a Distribution Date, the Administrator shall deposit into the Collection
Account that portion of such amounts received by it that is equal to the
Servicing Fee payable on such date.
SECTION 4.05. Distributions. (a) On each Determination Date, the
Administrator shall calculate all amounts required to determine the amounts to
be deposited in the Collection Account from the Reserve Account and the amounts
to be distributed therefrom on the related Monthly Servicing Payment Date or
Distribution Date.
(b) On each Monthly Servicing Payment Date that is not a Distribution
Date, the Administrator shall instruct the Indenture Trustee (based on the
information contained in the Administrator's Certificate and the related Master
Servicer's Report delivered pursuant to Section 3.08(a) and (b)) to distribute
to the Master Servicer by 11:00 a.m. (New York time), from and to the extent of
the Available Funds on deposit in the Collection Account, the Servicing Fee due
with respect to the preceding calendar month and all unpaid Servicing Fees from
prior months and the Indenture Trustee shall comply with such instructions.
(c) On each Distribution Date, the Administrator shall
instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and the related Master Servicer's Report delivered
pursuant to Section 3.08(a) and (c)) to make the following deposits and
distributions to the Persons or to the account specified below by 11:00 a.m.
(New York time), to the extent of the amount of Available Funds in the
Collection Account, in the following order of priority, and the Indenture
Trustee shall comply with such instructions:
(i) to the Master Servicer, the Servicing Fee due with
respect to the preceding calendar month and all unpaid Servicing Fees
from prior months;
(ii) to the Administrator, from the amount of Available
Funds remaining after the application of clause (i), the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(iii) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i) through (iv), the
Noteholders' Interest Distribution Amount ratably, without preference
or priority of any kind, according to the amounts payable on the Notes
in respect of Noteholders' Interest Distribution Amount;
(iv) to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds remaining after
the application of clauses (i) through (v), the Certificateholders'
Interest Distribution Amount, for distribution by the Eligible Lender
Trustee pursuant to the Trust Agreement, ratably, without preference
or priority of any kind, according to the amounts payable in respect
of Certificateholders' Interest Distribution Amount;
(v) to the Class A-1 Noteholders, from the amount of
Available Funds remaining after the application of clauses (i) through
(vi), the Noteholders' Principal Distribution Amount, ratably, without
preference or priority of any kind, according to the amounts payable
on the Class A-1 Notes for principal;
(vi) on each Distribution Date on and after which the Class
A-1 Notes have been paid in full, to the Class A-2 Noteholders, from
the amount of Available Funds remaining after the application of
clauses (i) through (vii), the Noteholders' Principal Distribution
Amount, ratably, without preference or priority of any kind, according
to the amounts payable on the Class A-2 Notes for principal;
(vii) for each Distribution Date on and after the date on
which the Notes have been paid in full, to the Eligible Lender Trustee
on behalf of the Certificateholders, from the amount of Available
Funds remaining after the application of clauses (i) through (viii),
the Certificateholders' Principal Distribution Amount, for
distribution by the Eligible Lender Trustee pursuant to the Trust
Agreement, ratably, without preference or priority of any kind,
according to the amounts payable in respect of the Certificate
Balance;
(viii) to the Reserve Account, from the amount of Available
Funds remaining after the application of clauses (i) through (ix), the
amount, if any, necessary to reinstate the balance of the Reserve
Account up to the Specified Reserve Account Balance;
[(ix) to the Master Servicer, from the amount of Available
Funds remaining after the application of clauses (i) through (x), the
aggregate unpaid amount of Excess Servicing Fees, if any;]
(x) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i) through (xi), the
aggregate unpaid amount of Noteholders' Interest Index Carryover, if
any, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes in respect of Noteholders'
Interest Index Carryover;
(xi) to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds remaining after
the application of clauses (i) through (xii), the aggregate unpaid
amount of Certificateholders' Interest Index Carryover, if any, for
distribution by the Eligible Lender trustee pursuant to the Trust
Agreement ratably, without preference or priority of any kind,
according to the amounts payable in respect of Certificateholders'
Interest Index Carryover; and
(xii) to the Reserve Account, the amount of Available Funds
remaining after the application of clauses (i) through (xiii).
SECTION 4.06. Reserve Account. (a) On the Closing Date, the Trust shall
deposit the Reserve Account Initial Deposit into the Reserve Account. On each
Determination Date, the Administrator shall calculate all amounts required to
determine the amounts to be withdrawn from the Reserve Account and the amounts
to be distributed therefrom on the related Monthly Servicing Payment Date or
Distribution Date.
(b) In the event that the Servicing Fee for any Monthly Servicing
Payment Date or Distribution Date exceeds the amount distributed to the Master
Servicer pursuant to Sections 4.05(b) and 4.05(c)(i) on such Monthly Servicing
Payment Date or Distribution Date, the Administrator shall instruct the
Indenture Trustee to withdraw from the Reserve Account on such Monthly Servicing
Payment Date or Distribution Date an amount equal to such excess, to the extent
of funds available therein, and shall instruct the Indenture Trustee (based on
the information contained in the Administrator's Certificate and the related
Master Servicer's Report delivered pursuant to Section 3.08(a) and (b)) to
distribute such amount to the Master Servicer; provided, however, that, except
as provided in Sections 4.06(d)(A) and 4.06(e), amounts on deposit in the
Reserve Account will not be available to cover any unpaid Excess Servicing Fees
to the Master Servicer.
(c) On each Distribution Date, the Administrator shall instruct the
Indenture Trustee (based on the information contained in the Administrator's
Certificate and the related Master Servicer's Report delivered pursuant to
Section 3.08(a) and (c)) to make the following deposits and distributions to the
Persons or to the account specified below by 11:00 a.m. (New York time), to the
extent of the amount of funds available in the Reserve Account, in the following
order of priority, and the Indenture Trustee shall comply with such
instructions:
(i) to the Administrator, in the event that the Administration
Fee for any Distribution Date exceeds the amount distributed to the
Administrator pursuant to Section 4.05(c)(ii) on such Distribution
Date, the Administrator shall instruct the Indenture Trustee to
withdraw from the Reserve Account on each Distribution Date an amount
equal to such excess, to the extent of funds available therein after
giving effect to paragraph (b) above;
(ii) to the Noteholders entitled thereto, in the event that
the Noteholders' Interest Distribution Amount for a Distribution Date
exceeds the amount distributed to Noteholders pursuant to Section
4.05(c)(iii) on such Distribution Date, the Administrator shall
instruct the Indenture Trustee to withdraw from the Reserve Account on
such Distribution Date an amount equal to such excess, to the extent of
funds available therein after giving effect to paragraphs (b) and
(c)(i) above, in the same order and priority as is set forth in Section
4.05(c)(iii); and
(iii) to the Eligible Lender Trustee for distribution to the
Certificateholders entitled thereto, in the event that the
Certificateholders' Interest Distribution Amount for a Distribution
Date exceeds the amount distributed to Certificateholders pursuant to
Section 4.05(c)(iv) on such Distribution Date, the Administrator shall
instruct the Indenture Trustee on such Distribution Date to withdraw
from the Reserve Account on such Distribution Date an amount equal to
such excess, to the extent of funds available therein after giving
effect to paragraphs (b) and (c)(i) through (ii) above, in the same
order and priority as is set forth in Section 4.05(c)(iv).
(d) (i) On the Class A-1 Final Maturity Date, the Class A-2 Final
Maturity Date and the Certificate Final Payment Date with respect to the Class
A-1 Notes, Class A-2 Notes and Certificates, respectively, the Administrator
shall instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and the related Master Servicer's Report delivered
pursuant to Section 3.08(a) and (c)) to distribute the amount on deposit in the
Reserve Account (after taking into account any deposits therein pursuant to
Section 4.05(c)(viii) and (c)(xii) and any withdrawals therefrom pursuant to
Section 4.06(b) and (c)) (up to the amount of cash or cash equivalents in the
Reserve Account) as a payment of principal, on their respective maturity dates,
first to the Noteholders until the principal amount of the Notes is paid in full
and then to the Eligible Lender Trustee for distribution to the
Certificateholders until the Certificate Balance is paid in full; provided,
however, that the amount of such distribution shall not exceed the outstanding
principal balance of the Notes or the Certificates, as applicable, after giving
effect to all other payments of principal to be made on such date.
(ii) In the event the Financed Student Loans are not sold
pursuant to Section 8.01(b), with respect to any Distribution Date
occurring on or after the Auction Distribution Date, if the amount on
deposit in the Reserve Account (after taking into account any deposits
therein pursuant to Section 4.05(c)(viii) and (c)(xii) and any
withdrawals therefrom pursuant to Section 4.06(b) and (c)) is greater
than the Specified Reserve Account Balance for such Distribution Date,
then the Administrator shall instruct the Indenture Trustee (based on
the information contained in the Administrator's Certificate and the
related Master Servicer's Report delivered pursuant to Section 3.08(a)
and (c)) to distribute such excess (up to the amount of cash or cash
equivalents in the Reserve Account) as an accelerated payment of
principal first to the Noteholders until the principal amount of the
Notes is paid in full and then to the Eligible Lender Trustee for
distribution to the Certificateholders until the Certificate Balance
is paid in full; provided, however, that the amount of such
distribution shall not exceed the outstanding principal balance of the
Notes or the Certificates, as applicable, after giving effect to all
other payments of principal to be made on such date.
(e) After giving effect to Section 4.06(b), (c) and (d) above, if the
amount on deposit in the Reserve Account on any Distribution Date (after giving
effect to all deposits or withdrawals therefrom on such Distribution Date other
than pursuant to this clause (e)) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Administrator shall instruct the
Indenture Trustee (based on the information contained in the Administrator's
Certificate and the related Master Servicer's Report delivered pursuant to
Section 3.08(a) and (c)) (A) to pay to the Master Servicer out of such excess in
the Reserve Account an amount equal to the amount described in Section
4.05(c)(ix) for such Distribution Date (to the extent not otherwise paid to the
Master Servicer on such Distribution Date), (B) to pay to the Noteholders out of
such excess an amount equal to the amount described in Section 4.05(c)(x) for
such Distribution Date (to the extent not otherwise paid to the Noteholders on
such Distribution Date), (C) to pay to the Eligible Lender Trustee for
distribution to the Certificateholders out of such excess an amount equal to the
amount described in Section 4.05(c)(xi) for such Distribution Date (to the
extent not otherwise paid to the Eligible Lender Trustee for distribution to the
Certificateholders on such Distribution Date) and (D) to distribute the
remaining amount of such excess to the Seller. Amounts properly distributed to
the Seller pursuant to this paragraph (e) shall be deemed released from the
Trust Estate and the security interest therein granted to the Indenture Trustee,
and the Seller shall in no event thereafter be required to refund any such
distributed amounts.
(f) On any Distribution Date on which the market value of the
securities and cash in the Reserve Account is sufficient to pay the remaining
principal amount of and accrued interest on the Notes and Certificates, and to
pay any Excess Servicing Fee, Noteholders' Interest Index Carryover and
Certificateholders' Interest Index Carryover, such securities in the Reserve
Account shall be promptly liquidated by the Administrator and the proceeds
thereof, together with any cash in the Reserve Account, shall be applied to pay
such amounts on such Distribution Date.
(g) Following the payment in full of the aggregate outstanding
principal balance of the Notes and the Certificate Balance and of all other
amounts owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders, Certificateholders, the Master Servicer, the
Administrator, the Indenture Trustee or the Eligible Lender Trustee and the
termination of the Trust (including any Excess Servicing Fees, Noteholders'
Interest Index Carryover and Certificateholders' Interest Index Carryover), any
amount remaining on deposit in the Reserve Account shall be distributed to the
Seller. The Seller shall in no event be required to refund any amounts properly
distributed pursuant to this Section 4.06(g).
SECTION 4.07. Statements to Certificateholders and Noteholders. On
each Determination Date preceding a Distribution Date, the Administrator shall
provide to the Indenture Trustee (with a copy to the Rating Agencies) for the
Indenture Trustee to forward on such succeeding Distribution Date to each
Noteholder of record and to the Eligible Lender Trustee for the Eligible Lender
Trustee to forward on such succeeding Distribution Date to each
Certificateholder of record a statement substantially in the form of Exhibits A
and B, respectively, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
of the Notes;
(ii) the amount of the distribution allocable to interest on
the Notes;
(iii) the amount of the distribution allocable to principal
of the Certificates;
(iv) the amount of the distribution allocable to interest on
the Certificates;
(v) the amount, if any, of the distribution allocable to any
Noteholders' Interest Index Carryover and any Certificateholders'
Interest Index Carryover, together with any remaining outstanding
amount of each thereof;
(vi) the Pool Balance as of the close of business on the
last day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under clauses (i) and (iii)
above;
(vii) the aggregate outstanding principal balance of the
Notes, the Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of such Distribution Date, after giving
effect to payments allocated to principal reported under clauses (i)
and (iii) above;
(viii) the Note Interest Rate and the Certificate Rate
applicable with respect to each distribution referred to in clauses
(ii) and (iv) above, indicating whether such interest rate is
calculated based on the Student Loan Rate or based on the T-Bill Rate
and specifying what each such interest rate would have been using the
alternate basis for such calculation; provided, however, that no such
calculation of the Student Loan Rate will be required to be made
unless the T-Bill Rate for such Interest Period is [100] basis points
greater than the T-Bill Rate of the preceding Determination Date or
the 52 Week Treasury Bill Rate is [100] basis points less than the
T-Bill Rate as of such Determination Date;
(ix) the amount of the Servicing Fee and any Excess
Servicing Fee paid to the Master Servicer with respect to the three
calendar months contained in the related Collection Period, and the
amount, if any, of the Excess Servicing Fee remaining unpaid after
giving effect to any such payment;
(x) the amount of the Administration Fee paid to the
Administrator in respect of the preceding Collection Period;
(xi) the amount of fees paid to the Indenture Trustee and
the fees paid to the Eligible Lender Trustee, respectively, with
respect to such Collection Period;
(xii) the amount of the aggregate Realized Losses, if any,
for such Collection Period and the balance of Financed Student Loans
that are delinquent in each delinquency period as of the end of such
Collection Period; and
(xiii) the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on such
Distribution Date.
Each amount set forth pursuant to clauses (i), (ii), (iii), (iv), (v),
(ix) and (x) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate or Note, as applicable. A copy of the
statements referred to above may be obtained by any Certificate Owner or Note
Owner by a written request to the Eligible Lender Trustee or the Indenture
Trustee, respectively, addressed to the respective Corporate Trust Office.
ARTICLE V
THE ADMINISTRATOR
SECTION 5.01. Representations of Administrator. The Administrator
makes the following representations on which the Issuer is deemed to have relied
in acquiring the Financed Student Loans. The representations speak as of the
execution and delivery of this Agreement and the Administration Agreement and as
of the Closing Date, but shall survive the sale of the Financed Student Loans to
the Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to
the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Administrator is duly
organized and validly existing as a national banking association in good
standing under the laws of the United States, 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.
(b) Power and Authority. The Administrator has the power and authority
to execute and deliver this Agreement and the Administration Agreement and to
carry out their terms; and the execution, delivery and performance of this
Agreement and the Administration Agreement have been duly authorized by the
Administrator by all necessary action.
(c) Binding Obligation. Each of this Agreement and the Administration
Agreement constitutes a legal, valid and binding obligation of the
Administrator, in each case enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and similar laws relating to
creditors' rights generally or the rights of creditors of banks the deposit
accounts of which are insured by the FDIC and subject to general principles of
equity.
(d) No Violation. The consummation of the transactions contemplated by
this Agreement or the Administration Agreement and the fulfillment of the terms
hereof or thereof do not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time or
both) a default under, the articles of association or by-laws of the
Administrator, or any indenture, agreement or other instrument to which the
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 indenture, agreement or other instrument (other than this
Agreement and the other Basic Documents); nor violate any law or, to the
knowledge of the Administrator, any order, rule or regulation applicable to the
Administrator 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. There are no proceedings or investigations pending
against the Administrator or, to its knowledge, threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Administrator or its properties: (i) asserting the
invalidity of this Agreement or any of the other Basic Documents to which the
Administrator is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents
to which the Administrator a party, (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 any of the other Basic Documents to which
the Administrator a party, the Notes or the Certificates or (iv) relating to the
Administrator and which might adversely affect the Federal or state income tax
attributes of the Issuer, the Notes or the Certificates.
SECTION 5.02. Existence. During the term of this Agreement, the
Administrator will keep in full force and effect its existence, rights and
franchises as a national banking association under the laws of the jurisdiction
of its organization.
SECTION 5.03. Liability of Administrator; Indemnities. The
Administrator shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Administrator under this Agreement or
the Administration Agreement.
The Administrator shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Master Servicer,
the Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and the Master Servicer from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the
Administrator in the performance of its duties under this Agreement or the
Administration Agreement or by reason of reckless disregard of its obligations
and duties hereunder or thereunder.
The Administrator shall pay reasonable compensation to the Indenture
Trustee and shall reimburse the Indenture Trustee for all reasonable expenses,
disbursements and advances, and indemnify, defend and hold harmless the
Indenture Trustee and its officers, directors, employees and agents from and
against all costs, expenses, losses, claims, damages and liabilities, to the
extent and in the manner provided in, and subject to the limitations of, Section
6.07 of the Indenture.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Administrator (or any successor thereto pursuant
to Section 5.04) as Administrator pursuant to Section 7.01(b), or a resignation
by such Administrator pursuant to this Agreement, such Administrator shall be
deemed to be the Administrator pending appointment of a successor Administrator
pursuant to Section 7.02.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement and the Administration Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Administrator shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Administrator, without interest.
SECTION 5.04. Merger or Consolidation of, or Assumption of the
Obligations of, Administrator. Any Person (a) into which the Administrator may
be merged or consolidated, (b) which may result from any merger or consolidation
to which the Administrator shall be a party or (c) which may succeed to the
properties and assets of the Administrator substantially as a whole, shall be
the successor to the Administrator without the execution or filing of any
document or any further act by any of the parties to this Agreement or to the
Administration Agreement; provided, however, that the Administrator hereby
covenants that it will not consummate any of the foregoing transactions except
upon satisfaction of the following: (i) the surviving Administrator, if other
than First Union or an Affiliate thereof, executes an agreement of assumption to
perform every obligation of the Administrator under this Agreement and the
Administration Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 5.01 shall
have been breached and no Administrator Default, and no event that, after notice
or lapse of time, or both, would become an Administrator Default shall have
occurred and be continuing, (iii) the surviving Administrator, if other than
First Union or an Affiliate thereof, shall have delivered to the Eligible Lender
Trustee and 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, and that the Rating Agency Condition shall have been
satisfied with respect to such transaction, (iv) unless First Union or an
Affiliate thereof is the surviving entity, such transaction will not result in a
material adverse Federal or state tax consequence to the Issuer, the Noteholders
or the Certificateholders and (v) unless First Union or an Affiliate thereof is
the surviving entity, the Administrator shall have delivered to the Eligible
Lender Trustee and the Indenture Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and Indenture Trustee, respectively, in the Financed Student Loans and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 5.05. Limitation on Liability of Seller, Administrator and
Others. Neither the Administrator nor any of its directors, officers, employees
or agents shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, the Indenture Trustee or the Eligible Lender Trustee except
as provided under this Agreement or the Administration Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or the Administration Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Administrator or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement or under
the Administration Agreement. The Administrator and any of its directors,
officers, employees or agents may rely in good faith on the advice of counsel or
on any document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder or under the Administration
Agreement.
Except as provided in this Agreement or the Administration Agreement,
the Administrator shall not be under any obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its duties to administer
the Financed Student Loans and the Trust in accordance with this Agreement and
the Administration Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Administrator may undertake
any reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
SECTION 5.06. First Union Not to Resign as Administrator. Subject to
the provisions of Section 5.04, First Union shall not resign from the
obligations and duties imposed on it as Administrator under this Agreement and
under the Administration Agreement except upon determination that the
performance of its duties under this Agreement and under the Administration
Agreement shall no longer be permissible under applicable law or shall violate
any final order of a court or administrative agency with jurisdiction over First
Union or its properties. Notice of any such determination permitting the
resignation of First Union shall be communicated to the Eligible Lender Trustee
and the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of First
Union in accordance with Section 7.02.
ARTICLE VI
THE MASTER SERVICER
SECTION 6.01. Representations of Master Servicer. The Master Servicer
makes the following representations on which the Issuer is deemed to have relied
in acquiring (through the Eligible Lender Trustee) the Financed Student Loans
and appointing the Master Servicer as Master Servicer hereunder. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Master Servicer is duly
organized and validly existing as a national banking association in good
standing under the laws of the United States, with the power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to service the Financed Student
Loans and to hold the Financed Student Loan Files as custodian.
(b) Due Qualification. The Master Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Financed Student Loans as required by
this Agreement) shall require such qualifications.
(c) Power and Authority. The Master Servicer has the power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Master Servicer by all necessary action. No registration with
or approval of any governmental agency is required for the due execution and
delivery by, and enforceability against, the Master Servicer of this Agreement.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Master Servicer enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and other
similar laws relating to creditors' rights generally or the rights of creditors
of banks the deposit accounts of which are insured by 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 conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Master Servicer, or any indenture, agreement or
other instrument to which the Master Servicer is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement and the other Basic Documents); nor
violate any law or, to the knowledge of the Master Servicer, any order, rule or
regulation applicable to the Master Servicer of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Master Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
against the Master Servicer, or, to its knowledge, threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Master Servicer or its properties: (i) asserting
the invalidity of this Agreement or any of the other Basic Documents to which
the Master Servicer is a party, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any of the other Basic
Documents to which the Master Servicer is a party, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Master Servicer of its obligations
under, or the validity or enforceability of, this Agreement or any of the other
Basic Documents to which the Master Servicer is a party, or (iv) relating to the
Master Servicer and which might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
SECTION 6.02. Indemnities of Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Master Servicer under this Agreement.
The Master Servicer shall pay for any loss, liability or expense,
including reasonable attorney's fees, that may be imposed on, incurred by or
asserted against the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator, the Certificateholders or the Noteholders or any
of the officers, directors, employees and agents of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Administrator or the Seller to the
extent that such loss, liability or expense arose out of, or was imposed upon
any such Person through, the negligence, willful misfeasance or bad faith of the
Master Servicer in the performance of its obligations and duties under this
Agreement or by reason of the reckless disregard of its obligations and 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, bad faith or recklessness 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. Notwithstanding the foregoing, if
the Master Servicer is rendered unable, in whole or in part, by a force outside
the control of the parties hereto (including acts of God, acts of war, fires,
earthquakes and other disasters) to satisfy its obligations under this
Agreement, 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. 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.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Master Servicer (or any successor thereto pursuant
to Section 6.03) as Master Servicer pursuant to Section 7.01(a), or a
resignation by such Master Servicer pursuant to this Agreement, such Master
Servicer shall be deemed to be the Master Servicer pending appointment of a
successor Master Servicer pursuant to Section 7.02.
Liability of the Master Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement. If the Master Servicer shall have made any
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Master Servicer, without
interest.
SECTION 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Master Servicer. Any Person (a) into which the Master Servicer
may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Master Servicer shall be a party or (c) which may
succeed to the properties and assets of the Master Servicer substantially as a
whole, shall be the successor to the Master Servicer without the execution or
filing of any document or any further act by any of the parties to this
Agreement; provided, however, that the Master Servicer hereby covenants that it
will not consummate any of the foregoing transactions except upon satisfaction
of the following: (i) the surviving Master Servicer, if other than First Union
or an Affiliate thereof, executes an agreement of assumption to perform every
obligation of the Master Servicer under this Agreement, (ii) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 6.01 shall have been breached and no Master Servicer Default, and no
event that, after notice or lapse of time, or both, would become an Master
Servicer Default shall have occurred and be continuing, (iii) the surviving
Master Servicer, if other than First Union or an Affiliate thereof, shall have
delivered to the Eligible Lender Trustee and 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, and that the Rating Agency
Condition shall have been satisfied with respect to such transaction, (iv)
unless First Union or an Affiliate thereof is the surviving entity, such
transaction will not result in a material adverse Federal or state tax
consequence to the Issuer, the Noteholders or the Certificateholders and (v)
unless First Union or an Affiliate thereof is the surviving entity, the Master
Servicer shall have delivered to the Eligible Lender Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Eligible Lender Trustee and Indenture Trustee,
respectively, in the Financed Student Loans and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests.
SECTION 6.04. Limitation on Liability of Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this 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 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 duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the 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 to service the Financed Student Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that 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 the Trust Agreement and the Noteholders under the
Indenture.
SECTION 6.05. First Union Not to Resign as Master Servicer. Subject to
the provisions of Section 6.03, First Union shall not resign from the
obligations and duties hereby imposed on it as Master Servicer under this
Agreement except upon determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of First Union 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 First Union in accordance with Section
7.02.
ARTICLE VII
DEFAULT
SECTION 7.01. Master Servicer Default; Administrator Default. (a)
Master Servicer Default. If any one of the following events (a "Master Servicer
Default") shall occur and be continuing:
(1) any failure by the Master Servicer (i) to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents or (ii) in the event that daily
deposits into the Collection Account are not required, to deliver to
the Administrator any payment required by the Basic Documents, which
failure in case of either clause (i) or (ii) continues unremedied for
five Business Days after written notice of such failure is received by
the Master Servicer from the Eligible Lender Trustee, the 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 and other Basic
Document to which the Master Servicer is a signatory, which failure
shall (i) materially and adversely affect the rights of Noteholders or
Certificateholders and (ii) continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the 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 Noteholders or
Certificateholders, as applicable, representing not less than 25% of
the Outstanding Amount of the Notes or 25% of the outstanding
Certificate Balance; provided, however, any breach of Sections 3.01,
3.02, 3.03 or 3.05 shall not be deemed a Master Servicer Default so
long as the Servicer is in compliance with its repurchase and
reimbursement obligations under Section 3.06;
(3) an Insolvency Event occurs with respect to the Master
Servicer; or
(4) any failure by the Master Servicer to comply with any
requirements under the Higher Education Act resulting in a loss of its
eligibility as a third-party servicer;
then, and in each and every case, so long as the Master Servicer Default shall
not have been remedied, either the Indenture Trustee, or the Noteholders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the 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 6.02 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 7.02; and, without
limitation, the Indenture Trustee and the Eligible Lender Trustee are hereby
authorized and empowered to execute and deliver, for the benefit of the
predecessor 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 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.
(b) Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(1) (i) in the event that daily deposits into the Collection
Account are not required, any failure by the Administrator to deliver
to the Indenture Trustee for deposit in any of the Trust Accounts any
Available Funds required to be paid on or before the Business Day
immediately preceding any Monthly Servicing Payment Date or
Distribution Date, as applicable, or (ii) any failure by the
Administrator to direct the Indenture Trustee to make any required
distributions from any of the Trust Accounts, which failure in case of
either clause (i) or (ii) continues unremedied for five Business Days
after written notice of such failure is received by the Administrator
from the Indenture Trustee or the Eligible Lender Trustee or after
discovery of such failure by an officer of the Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of
the Administrator set forth in this Agreement, the Administration
Agreement or any other Basic Document to which the Administrator is a
signatory, which failure shall (i) materially and adversely affect the
rights of Noteholders or Certificateholders and (ii) continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Administrator by the Indenture Trustee or the
Eligible Lender Trustee or (B) to the Administrator and to the
Indenture Trustee and the Eligible Lender Trustee by the Noteholders
or Certificateholders, as applicable, representing not less than 25%
of the Outstanding Amount of the Notes or 25% of the outstanding
Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee, or the Noteholders evidencing
not less than 25% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee and the Eligible
Lender Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 5.03 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 7.02; and, without limitation, the Indenture Trustee and the Eligible
Lender Trustee are hereby authorized and empowered to execute and deliver, for
the benefit of the predecessor Administrator, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The predecessor Administrator shall cooperate with the successor
Administrator, the Indenture Trustee and the Eligible Lender Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Administrator under this Agreement and the Administration Agreement. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with amending this Agreement and the Administration Agreement to reflect such
succession as Administrator pursuant to this Section shall be paid by the
predecessor Administrator upon presentation of reasonable documentation of such
costs and expenses. Upon receipt of notice of the occurrence of an Administrator
Default, the Eligible Lender Trustee shall give notice thereof to the Rating
Agencies.
SECTION 7.02. 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 7.01, 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 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 or under this Agreement and the
Administration Agreement, as the case may be, in the case of termination, only
until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of resignation, until the later of (x) the date [120] days from the
delivery to the Eligible Lender Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon which the
predecessor 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. In the event that 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 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 Servicing Fee and any Excess
Servicing Fees, or the Administration Fee, as the case may be. Notwithstanding
the above, the Indenture Trustee shall, if it shall be unwilling or legally
unable so to act, appoint or petition a court of competent jurisdiction to
appoint, any established institution whose regular business shall include the
servicing of student loans, as the successor to the Master Servicer under this
Agreement or to the Administrator under this Agreement and the Administration
Agreement; provided, however, that such right to appoint or to petition for the
appointment of any such successor Master 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
placed on the predecessor Master Servicer or Administrator, as the case may be,
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Master Servicer or Administrator (which shall not
exceed the Servicing Fee and any Excess Servicing Fees, or the Administration
Fee, as the case may be, unless such compensation arrangements will not result
in a downgrading of the Notes or the Certificates by any Rating Agency) and all
the rights granted to the predecessor 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 pursuant hereto and thereto, shall be
entitled to resign to the extent a qualified successor Master Servicer or
Administrator has been appointed and has assumed all the obligations of the
Master Servicer or the Administrator, as the case may be, in accordance with the
terms of this Agreement and the other Basic Documents.
SECTION 7.03. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer or the
Administrator, as the case may be, pursuant to this Article VII, 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 7.04. Waiver of Past Defaults. The Noteholders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the
Certificateholders of Certificates evidencing not less than a majority of the
outstanding Certificate Balance, in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by the Master
Servicer in the performance of its obligations hereunder, and any default by the
Administrator in the performance of its obligations hereunder and under the
Administration Agreement, and any consequences thereof, except a default in
making any required deposits to or payments from any of the Trust Accounts (or
giving instructions regarding the same) in accordance with this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Master Servicer Default or Administrator Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement and the
Administration Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. (a) Optional Purchase of all Financed
Student Loans. As of the last day of any Collection Period immediately preceding
a Distribution Date as of which the then outstanding Pool Balance is 5% or less
of the Initial Pool Balance, the Seller shall have the option to purchase the
Trust Estate, other than the Trust Accounts.
To exercise such option, the Seller shall deposit pursuant to Section
4.04 in the Collection Account an amount equal to the aggregate Purchase Amount
for the Financed Student Loans remaining in the Trust Estate as of last day of
such Collection Period and the related rights with respect thereto, plus the
appraised value of any such other property held by the Trust other than the
Trust Accounts, such value to be determined by an appraiser mutually agreed upon
by the Seller and the Eligible Lender Trustee, and shall succeed to all
interests in and to the Trust; provided, however, that the Seller may not effect
such purchase if the aggregate Purchase Amount to be so deposited in the
Collection Account does not equal or exceed an amount equal to the sum of the
unpaid outstanding principal amount of the Notes and Certificate Balance, plus
accrued and unpaid interest thereon at the Certificate Rate to the date of
exercise.
(b) Auction of Financed Student Loans. Any Financed Student Loans
remaining in the Trust as of the end of the Collection Period immediately
following the Distribution Date on which the Pool Balance is less than or equal
to 10% of the Initial Pool Balance will be offered for sale by the Administrator
(pursuant to the Administration Agreement) on behalf of the Indenture Trustee in
accordance with Section 4.04 of the Indenture.
(c) Notice. As described in Article IX of the Trust Agreement, notice
of any termination of the Trust shall be given by the Administrator to the
Eligible Lender Trustee and the Indenture Trustee as soon as practicable after
the Administrator has received notice thereof.
(d) 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 4.06(b) and the Eligible Lender Trustee will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement and any other Basic Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment. This Agreement may be amended by the Seller,
the Master Servicer, the Administrator and the Eligible Lender Trustee, with the
consent of the Indenture Trustee (which consent shall not be unreasonably
withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Eligible Lender Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Master Servicer, the Administrator and the Eligible Lender Trustee, with the
consent of the Indenture Trustee (which consent shall not be unreasonably
withheld), the consent of the Noteholders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the consent of the
Certificateholders of Certificates evidencing not less than a majority of the
Certificate Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments with respect to Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Noteholders or the Certificateholders of which
are required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent (or, in
the case of the Rating Agencies, five Business Days prior thereto), the Eligible
Lender Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee and the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement. The Eligible Lender Trustee and
the Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Eligible Lender Trustee's or the Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
SECTION 9.02. Notices. All demands, notices and communications upon or
to the Seller, the Administrator, the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee or the Rating Agencies under this Agreement shall
be in writing, personally delivered or mailed by certified mail, return receipt
requested, (or in the form of telex or facsimile notice, followed by written
notice delivered as aforesaid) and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, to First Union National Bank, 102
Pennsylvania Avenue, Avondale, PA 19311, Attention: ___________ (telephone:
(___) __________; facsimile: (___) __________, (b) in the case of the Master
Servicer and the Administrator, to First Union National Bank, 301 South College
Street, Charlotte, NC 28288-_____, Attention: __________, (telephone: (___)
__________; facsimile: (___) __________, (c) in the case of the Issuer or the
Eligible Lender Trustee, at the Corporate Trust Office of the Eligible Lender
Trustee, (d) in the case of the Indenture Trustee, at its Corporate Trust
Office, (e) in the case of Fitch, to Fitch Investors Service, L.P., One State
Street Plaza, New York, NY 10004, Attention: Asset Backed Surveillance
(telephone: 212-___-____; facsimile: 212-___-____), and (e) in the case of
Moody's, to Moody's Investors Service, Inc. 99 Church Street, New York, NY
10007, Attention: ABS Monitoring Department, (telephone: 212-553-0300;
facsimile: 212-553-4600), or, as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 9.03. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.04 and 6.03 and as provided
in the provisions of this Agreement concerning the resignation of the Master
Servicer or the Administrator, this Agreement may not be assigned by the
Administrator 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 9.04. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Master Servicer, the
Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee and the Noteholders, as third party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 9.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.07. 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 9.08. 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 9.09. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Master Servicer and the Administrator shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Issuer, acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Master Servicer and the Administrator shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to the
Seller, acquiesce, petition or otherwise invoke or cause the Seller to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Seller under any insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
SECTION 9.10. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by The First National Bank of Chicago
not in its individual capacity but solely in its capacity as Eligible Lender
Trustee of the Issuer and in no event shall The First National Bank of Chicago
in its individual capacity or, except as expressly provided in the Trust
Agreement, as beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto as to all of which recourse shall be had solely to the assets of
the Issuer.
(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.
<PAGE>
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.
FIRST UNION STUDENT LOAN TRUST 1997-1,
By: The First National Bank of Chicago,
not in its individual capacity but solely as
Eligible Lender Trustee on behalf of the Trust,
By:______________________________
Name: ___________________________
Title: __________________________
FIRST UNION NATIONAL BANK, as Master Servicer
and Administrator
By:______________________________
Name: ___________________________
Title: __________________________
THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible Lender
Trustee
By:______________________________
Name: ___________________________
Title: __________________________
Acknowledged and accepted as of
the day and year first above
written:
BANKERS TRUST COMPANY, not in
its individual capacity but
solely as Indenture Trustee
By:_____________________________
Name: __________________________
Title: _________________________
<PAGE>
SCHEDULE A
Schedule of Financed Student Loans
<PAGE>
SCHEDULE B
Location of Financed Student Loan Files
Documents relating to the Financed Student Loans (including original
notes) are stored at:
1) AFSA Data Corporation
2277 E. 220th Street
Long Beach, CA 90810-1690
and
501 Bleecker Street
Utica, NY 13501-2498
2) Pennsylvania Higher Education Assistance Agency
660 Boas Street
Harrisburg, PA 17102-1396
3) Connecticut Student Loan Foundation
525 Brook Street
Rocky Hill, CT 06067
<PAGE>
SCHEDULE C
Servicing Fee Schedules
<PAGE>
EXHIBIT A
Form of Noteholders' Statement pursuant to Section 4.07(b) of Master Servicing
Agreement
Distribution Date: ___________________
(i) Amount of principal being paid or distributed in respect of the Notes:
___________ ($_______ per $1,000 original principal amount of Notes)
(ii) Amount of interest being paid or distributed in respect of the Notes:
___________ ($_______ per $1,000 original principal amount of Notes)
(iii)Amount of Noteholders' Interest Index Carryover being paid or distributed
(if any) and amount remaining (if any):
(1) Distributed: ___________ ($_______ per $1,000 original principal
amount of Notes)
(2) Balance: __________ ($_______ per $1,000 original principal amount of
Notes)
(iv) Pool Balance at end of related Collection Period: ________
(v) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Notes: ____________
(2) Note Pool Factor: ____________
(b) (1) Certificate Balance: _______________
(2) Certificate Pool Factor: ___________
(vi) Note Interest Rate:
(a) In general: 1/(1) T-Bill Rate for the period from the previous
Distribution Date to this Distribution Date was _____%; and (2) the
Student Loan Rate was _____%.
(b) Note Interest Rate: ______% (based on [T-Bill Rate] [Student Loan
Rate])
(vii)(a) Amount of Servicing Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Notes)
(b) Amount of Excess Servicing Fee being distributed and remaining balance
(if any):
(1) Distributed: __________ ($_______ per $1,000 original principal
amount of Notes)
(2) Balance: ____________ ($_______ per $1,000 original principal
amount of Notes)
(viii) Amount of Administration Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Notes)
(ix) (a) Aggregate amount of Realized Losses (if any) for the related Collection
Period: ____________
[1/ This calculation not required unless the excess of the T-Bill Rate over
_________, expressed as a percentage, is greater than 100 basis points as of the
preceding Determination Date.]
(b) Balance of Financed Student Loans that are delinquent in each
delinquency period as of the end of the related Collection Period:
____________
(x) Amount in the Reserve Account: ____________
<PAGE>
EXHIBIT B
Form of Certificateholders' Statement pursuant to Section 4.07(b) of Master
Servicing Agreement )
Distribution Date: ___________________
(i) Amount of principal being paid or distributed in respect of the
Certificates: ___________ ($_______ per $1,000 original principal amount of
the Certificates)4/
(ii) Amount of interest being paid or distributed in respect of the
Certificates: ______________ ($_______ per $1,000 original principal amount
of Certificates)
(iii)Amount of Certificateholders' Interest Index Carryover being paid or
distributed (if any) and amount remaining (if any):
(1) Distributed: ______________ ($_______ per $1,000 original principal
amount of Certificates)
(2) Balance: ______________ ($_______ per $1,000 original principal amount
of Certificates)
(iv) Pool Balance at end of related Collection Period: _______
4/Only after the Notes have been paid in full.
(v) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class A- 1 Notes: ____________
(2) Note Pool Factor: ____________
(b) (1) Certificate Balance: ________________
(2) Certificate Pool Factor: ____________
(vi) Applicable Interest Rate:
(a) In general:
(1) T-Bill Rate for the period from the previous Distribution Date to this
Distribution Date was _____%; and
(2) the Student Loan Rate was _____%. (b) Certificate Rate: ______% (based
on [T-Bill Rate] [Student Loan Rate])
(vii)(a) Amount of Servicing Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Certificates)
(b) Amount of Excess Servicing Fee being distributed and remaining balance
(if any):
(1) Distributed: ______________ ($_______ per $1,000 original
principal amount of Certificates)
(2) Balance: ______________ ($_______ per $1,000 of original
principal amount Certificates)
(viii) Amount of Administration Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Certificates)
(ix) (a) Aggregate amount of Realized Losses (if any) for the related Collection
Period: ____________
(b) Balance of Financed Student Loans that are delinquent in each
delinquency period as of the end of the related Collection Period:
____________
(x) Amount in the Reserve Account: ____________
<PAGE>
EXHIBIT C
FORM OF ADMINISTRATOR'S CERTIFICATE
[To be provided]
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. Definitions and Usage........................................
ARTICLE II
THE FINANCED STUDENT LOANS
SECTION 2.01. Custody of Financed Student Loan Files......................
SECTION 2.02. Duties of Master Servicer as Custodian......................
SECTION 2.03. Reserved....................................................
SECTION 2.04. Effective Period and Termination............................
ARTICLE III
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 3.01. Duties of Master Servicer...................................
SECTION 3.02. Collection of Financed Student Loan Payments................
SECTION 3.03. Realization Upon Financed Student Loans.....................
SECTION 3.04. Computation of Note Interest Rate and Certificate Rate......
SECTION 3.05. No Impairment...............................................
SECTION 3.06. Purchase Of Financed Student Loans; Reimbursement...........
SECTION 3.07. Servicing Fee, Excess Servicing Fee.........................
SECTION 3.08. Administrator's Certificate; Master Servicer's Report.......
SECTION 3.09. Annual Statement as to Compliance; Notice of Default........
SECTION 3.10. Annual Independent Certified Public Accountant's Report.....
SECTION 3.11. Access to Certain Documentation and Information
Regarding Financed Student Loans............................
SECTION 3.12. Master Servicer and Administrator Expenses..................
SECTION 3.13. Appointment of Subservicers.................................
SECTION 3.14. Covenants and Agreements of the Issuer, Administrator,
Eligible Lender Trustee and Master Servicer.................
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.01. Establishment Of Trust Accounts.............................
SECTION 4.02. Collections.................................................
SECTION 4.03. Application of Collections..................................
SECTION 4.04. Additional Deposits.........................................
SECTION 4.05. Distributions...............................................
SECTION 4.06. Reserve Account.............................................
SECTION 4.07. Statements to Certificateholders and Noteholders............
ARTICLE V
THE ADMINISTRATOR
SECTION 5.01. Representations of Administrator............................
SECTION 5.02. Existence...................................................
SECTION 5.03. Liability of Administrator; Indemnities.....................
SECTION 5.04. Merger or Consolidation of, or Assumption of the
Obligations of, Administrator...............................
SECTION 5.05. Limitation on Liability of Seller,
Administrator and Others....................................
SECTION 5.06. First Union Not to Resign as Administrator..................
ARTICLE VI
THE MASTER SERVICER
SECTION 6.01. Representations of Master Servicer..........................
SECTION 6.02. Indemnities of Master Servicer..............................
SECTION 6.03. Merger or Consolidation of, or Assumption
of the Obligations of, Master Servicer......................
SECTION 6.04. Limitation on Liability of Master Servicer and Others.......
SECTION 6.05. First Union Not to Resign as Master Servicer................
ARTICLE VII
DEFAULT
SECTION 7.01. Master Servicer Default; Administrator Default..............
SECTION 7.02. Appointment of Successor....................................
SECTION 7.03. Notification to Noteholders and Certificateholders..........
SECTION 7.04. Waiver of Past Defaults.....................................
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination.................................................
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment...................................................
SECTION 9.02. Notices.....................................................
SECTION 9.03. Assignment..................................................
SECTION 9.04. Limitations on Rights of Others.............................
SECTION 9.05. Severability................................................
SECTION 9.06. Separate Counterparts.......................................
SECTION 9.07. Headings....................................................
SECTION 9.08. Governing Law...............................................
SECTION 9.09. Nonpetition Covenants.......................................
SECTION 9.10. Limitation of Liability of Eligible Lender
Trustee and Indenture Trustee...............................
Schedule A - Schedule of Financed Students Loans
Schedule B - Location of Financed Student Loans
Schedule C - Servicing Fee Schedules
Exhibit A - Form of Noteholders' Statement
Exhibit B - Form of Certificateholders' Statement
Exhibit C - Form of Administrators' Certificate
- --------------------------------------------------------------------------------
SALE AGREEMENT
among
FIRST UNION STUDENT LOAN TRUST 1997-1
as Issuer,
FIRST UNION NATIONAL BANK
as Seller,
AND
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of June 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
SALE AGREEMENT, dated as of June 1, 1997, among FIRST UNION STUDENT LOAN
TRUST 1997-1, a Delaware business trust (the "Issuer"), FIRST UNION NATIONAL
BANK ("First Union"), a national banking association with its principal place of
business in Avondale, Pennsylvania (the "Seller"), and THE FIRST NATIONAL BANK
OF CHICAGO, a national banking association, solely as eligible lender trustee
and not in its individual capacity (the "Eligible Lender Trustee").
WHEREAS the Issuer desires to purchase, and the Seller is willing to sell
to the Issuer all of its right, title and interest in and to the Financed
Student Loans upon the terms and conditions hereinafter set forth;
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;
WHEREAS, it is contemplated that following such sale, transfer and
assignment to the Issuer hereby, that the Issuer will pledge all of its right,
title and interest in and to the Financed Student Loans to the Indenture
Trustee, as security for the payment of notes to be issued pursuant to the
Indenture dated as of June 1, 1997, between the Issuer and the Indenture
Trustee;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in Appendix A to
the Indenture, which also contains rules as to usage and construction that shall
be applicable herein.
ARTICLE II
CONVEYANCE OF FINANCED STUDENT LOANS
SECTION 2.01. Conveyance of Financed Student Loans. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of (i)
the net proceeds from the sale of the Notes and the Certificates (net of the
Reserve Account Initial Deposit) and (ii) the other amounts to be distributed
from time to time to the Seller in accordance with the terms of this Agreement
and the other Basic Documents (as evidenced by the Excess Distribution
Certificate), the Seller does hereby, as evidenced by a duly executed written
assignment in the form of Exhibit A, sell, transfer, assign, set over and
otherwise convey to the Eligible Lender Trustee on behalf of the Issuer, without
recourse (subject to the obligations herein):
(i) all right, title and interest in and to the Financed Student
Loans and all obligations of the Obligors thereunder, including all
moneys paid thereunder, and all written communications received by the
Seller with respect thereto (including borrower correspondence,
notices of death, disability or bankruptcy and requests for deferrals
or forbearance), on or after the Cutoff Date; and
(ii) the proceeds of any and all of the foregoing.
SECTION 2.02. Endorsement. The Seller hereby appoints each of the Eligible
Lender Trustee and the Indenture Trustee as the Seller's true and lawful
attorney-in-fact with full power of substitution to endorse the Seller's name on
any promissory note evidencing the Financed Student Loans transferred to the
Eligible Lender Trustee on behalf of the Trust pursuant to Section 2.01. The
Seller acknowledges and agrees that this power of attorney shall be construed as
a power coupled with an interest, shall be irrevocable as long as the Trust
Agreement remains in effect and shall continue in effect until the Trust
Agreement terminates.
ARTICLE III
THE FINANCED STUDENT LOANS
SECTION 3.01. Representations and Warranties of Seller With Respect to the
Financed Student Loans. The Seller makes the following representations and
warranties as to the Financed Student Loans on which the Issuer is deemed to
have relied in acquiring (through the Eligible Lender Trustee) the Financed
Student Loans. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Financed Student Loans to the Eligible
Lender Trustee on behalf of the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(i) Characteristics of Financed Student Loans. Each Financed
Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its
jurisdiction by the Seller in the ordinary course of its business to
an eligible borrower under applicable law and agreements and was fully
and properly executed by the parties thereto and (B) provides or, when
the payment schedule with respect thereto is determined, will provide
for payments on a periodic basis that fully amortize the principal
amount of such Financed Student Loan by its maturity and yield
interest at the rate applicable thereto, as such maturity may be
modified in accordance with any applicable deferral or forbearance
periods granted in accordance with applicable laws and restrictions,
including those of the Higher Education Act or any Guarantee
Agreement. Each Financed Student Loan qualifies the holder thereof to
receive Interest Subsidy Payments (other than SLS Loans, unsubsidized
Stafford Loans and certain Consolidation Loans) and Special Allowance
Payments from the Department and Guarantee Payments from the
applicable Guarantor and qualifies the applicable Guarantor to receive
reinsurance payments thereon from the Department.
(ii) Schedule of Financed Student Loans. The information set
forth in Schedules A and B to this Agreement is true and correct in
all material respects as of the opening of business on the Cutoff Date
(with respect to Schedules A and B to this Agreement), and no
selection procedures believed to be adverse to the Noteholders or the
Certificateholders were utilized in selecting the Financed Student
Loans. The computer tape regarding the Financed Student Loans made
available to the Issuer and its assigns is true and correct in all
respects as of the Cutoff Date.
(iii) Compliance with Law. Each Financed Student Loan complied at
the time it was originated or made and at the execution of this
Agreement, complies, and the Seller and its agents, with respect to
each such Financed Student Loan, have at all times complied, in all
material respects with all requirements of applicable Federal, state
and local laws and regulations thereunder, including the Higher
Education Act, usury law, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Reserve Board's Regulation B and
other consumer credit laws and equal credit opportunity and disclosure
laws and all applicable requirements of the Guarantee Agreements.
(iv) Binding Obligation. Each Financed Student Loan represents
the genuine, legal, valid and binding payment obligation in writing of
the borrower thereof, enforceable by or on behalf of the holder
thereof in accordance with its terms, and no Financed Student Loan has
been satisfied, subordinated or rescinded, subject to clause (xiii)
below.
(v) No Defenses. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened or exists with respect to any
Financed Student Loan.
(vi) No Default. No Financed Student Loan has a payment that is
more than 120 days overdue as of the Cutoff 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 continuing for a period
of not more than 120 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 Seller has not waived and
shall not waive any of the foregoing other than as permitted by the
Basic Documents.
(vii) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the Financed
Student Loans from the Seller to the Eligible Lender Trustee on behalf
of the Issuer and that the beneficial interest in and title to such
Financed Student Loans not be part of the debtor's estate in the event
of the appointment of a receiver with respect to the Seller. No
Financed Student Loan has been sold, transferred, assigned or pledged
by the Seller to any Person other than the Eligible Lender Trustee on
behalf of the Issuer. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good title to each Financed
Student Loan, free and clear of all Liens and, immediately upon the
transfer thereof, the Eligible Lender Trustee on behalf of the Issuer
shall have good title to each such Financed Student Loan, free and
clear of all Liens, or the transfer shall have been perfected under
the UCC.
(viii) Lawful Assignment. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer and assignment of such Financed Student Loan
or any Financed Student Loan under this Agreement or the Indenture is
unlawful, void or voidable.
(ix) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Eligible Lender Trustee on
behalf of the Issuer a first perfected ownership interest in the
Financed Student Loans, and to give the Indenture Trustee a first
perfected security interest therein, shall have been made on or prior
to the Closing Date.
(x) One Original. There is only one original executed copy of the
promissory note evidencing each Financed Student Loan.
(xi) Principal Balance. The aggregate principal balance of the
Financed Student Loans, plus accrued interest to be capitalized with
respect thereto, as of the Cutoff Date, is $--------------.
(xii) No Claims. As of the Cutoff Date, no claim for payment with
respect to a Financed Student Loan has been made to a Guarantor.
(xiii) No Bankruptcies or Deaths. No borrower of any Financed
Student Loan as of the date the Trust was created was noted in the
related Financed Student Loan File as being currently involved in a
bankruptcy proceeding or as having died.
(xiv) General Intangibles. Each Financed Student Loan constitutes
"general intangibles" as defined in the UCC.
(xv) U.S. Obligors. Less than [--]% of the Financed Student Loans
are due from Persons not having a mailing address in the United States
of America.
(xvi) Interest Accruing. Each Financed Student Loan is accruing
interest (whether or not such interest is being paid currently, by the
borrower or by the Department, or is being capitalized), except as
otherwise expressly permitted by the Basic Documents.
SECTION 3.02. Repurchase Upon Breach; Reimbursement. The Seller or the
Eligible Lender Trustee, as the case may be, shall inform the other parties to
this Agreement and the Indenture Trustee promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties made
pursuant to Section 3.01 or Section 4.01. Unless any such breach shall have been
cured within 120 days following the discovery thereof by the Eligible Lender
Trustee or receipt by the Eligible Lender Trustee of written notice from the
Seller of such breach, the Seller shall be obligated to repurchase any Financed
Student Loan in which the interests of the Noteholders or the Certificateholders
are materially and adversely affected by any such breach as of the first day
succeeding the end of such 120-day period that is the last day of a Collection
Period; provided that it is understood that any such breach that does not affect
any Guarantor's obligation to guarantee payment of such Financed Student Loan to
the Eligible Lender Trustee will not be considered to have a material adverse
effect for this purpose. In consideration of and simultaneously with the
repurchase of the Financed Student Loan, the Seller shall remit the Purchase
Amount, in the manner specified in Section 4.04 of the Master Servicing
Agreement, and the Issuer shall execute such assignments and other documents
reasonably requested by the Seller in order to effect such transfer. Upon any
such transfer of a Financed Student Loan, legal title to, and beneficial
ownership and control of, the related Financed Student Loan File will thereafter
belong to the Seller. In addition, if any such breach by the Seller does not
trigger such a repurchase obligation but does result in the refusal by a
Guarantor to guarantee all or a portion of the accrued interest, or the loss
(including any obligation of the Issuer to repay to the Department) of certain
Interest Subsidy Payments and Special Allowance Payments, with respect to a
Financed Student Loan, then, unless such breach, if curable, is cured within 120
days, the Seller shall reimburse the Issuer by remitting an amount equal to the
sum of all such non-guaranteed interest amounts and such forfeited Interest
Subsidy Payments and Special Allowance Payments in the manner specified in
Section 4.04 of the Master Servicing Agreement. Subject to the provisions of
Section 4.03, the sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders with respect to a
breach of representations and warranties set forth in Section 3.01 or 4.01 and
the agreement contained in this Section shall be to require the Seller to
repurchase Financed Student Loans or to reimburse the Issuer as provided above
pursuant to this Section, subject to the conditions contained herein.
ARTICLE IV
THE SELLER AND THE ADMINISTRATOR
SECTION 4.01. Representations of Seller. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Financed Student Loans. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale of the Financed Student Loans to the Eligible Lender Trustee on behalf of
the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Seller is duly organized and
validly existing as a national banking association in good standing under the
laws of the United States of America, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire and own the Financed
Student Loans.
(b) Power and Authority of the Seller. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its terms; the
Seller has full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Issuer (or with the Eligible Lender
Trustee on behalf of the Issuer) and the Seller has duly authorized such sale
and assignment to the Issuer (or to the Eligible Lender Trustee on behalf of the
Issuer) by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the Seller by all
necessary action.
(c) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Seller, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization and similar laws
relating to creditors' rights generally or the rights of creditors of banks the
deposit accounts of which are insured by the FDIC and subject to general
principles of equity.
(d) No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof or thereof do not conflict
with, result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time or both) a default under, the articles
of association or by-laws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
knowledge of the Seller, any order, rule or regulation applicable to the Seller
of any court or of any Federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Seller or its
properties.
(e) No Proceedings. There are no proceedings or investigations pending
against the Seller or, to its knowledge, threatened against the Seller before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties: (i)
asserting the invalidity of this Agreement or any of the other Basic Documents,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement, 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.
SECTION 4.02. Existence. During the term of this Agreement, the Seller will
keep in full force and effect its existence, rights and franchises as a national
banking association under the laws of the jurisdiction of its organization.
SECTION 4.03. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer, the
Eligible Lender Trustee and the Indenture Trustee and their officers, directors,
employees and agents from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated herein and
in the other Basic Documents (except any such income taxes arising out of fees
paid to the Eligible Lender Trustee or the Indenture Trustee), including any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, and as of the date of, the sale of the Financed
Student Loans to the Eligible Lender Trustee on behalf of the Issuer or the
issuance and original sale of the Certificates and the Notes, or asserted with
respect to ownership of the Financed Student Loans or Federal or other income
taxes arising out of distributions on the Certificates and the Notes) and costs
and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders and the officers, directors, employees and agents of the Issuer, the
Eligible Lender Trustee and the Indenture Trustee from and against any and all
costs, expenses, losses, claims, damages and liabilities arising out of, or
imposed upon such Person through, (i) the Seller's willful misfeasance, bad
faith or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
and (ii) the Seller's or the Issuer's violation of Federal or state securities
laws in connection with the offering and sale of the Notes and the Certificates.
(c) The Seller shall be liable as primary obligor for, and shall indemnify,
defend and hold harmless the Eligible Lender Trustee and its officers,
directors, employees and agents from and against, all costs, expenses, losses,
claims, damages, obligations and liabilities arising out of, incurred in
connection with or relating to the Trust Agreement, the other Basic Documents to
which it is a party, the Trust Estate, the acceptance or performance of the
trusts and duties set forth herein and in the Trust Agreement or the action or
the inaction of the Eligible Lender Trustee hereunder and under the Trust
Agreement, except to the extent that such cost, expense, loss, claim, damage,
obligation or liability: (i) shall be due to the willful misfeasance, bad faith
or negligence (except for errors in judgment) of the Eligible Lender Trustee,
(ii) shall arise from any breach by the Eligible Lender Trustee of its covenants
under any of the Basic Documents to which it is a party; or (iii) shall arise
from the breach by the Eligible Lender Trustee of any of its representations or
warranties set forth in Section 7.03 of the Trust Agreement. In the event of any
claim, action or proceeding for which indemnity will be sought pursuant to this
paragraph, the Eligible Lender Trustee's choice of legal counsel shall be
subject to the approval of the Seller, which approval shall not be unreasonably
withheld.
(d) The Seller shall pay any and all taxes levied or assessed upon all or
any part of the Trust Estate (other than those taxes expressly excluded from the
Seller's responsibilities pursuant to the parentheticals in paragraph (a)
above).
Indemnification under this Section shall survive the resignation or removal
of the Eligible Lender Trustee or the Indenture Trustee and the termination of
this Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include the reasonable fees and expenses of counsel and expenses of litigation.
If the Seller shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Seller, without interest.
SECTION 4.04. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, shall be the successor to the Seller without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that the Seller hereby covenants that it will
not consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Seller, if other than First Union or the Master
Servicer, executes an agreement of assumption to perform every obligation of the
Seller under this Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 4.01 shall
have been breached, (iii) the surviving Seller, if other than First Union or the
Master Servicer, shall have delivered to the Eligible Lender Trustee and 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, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) such transaction will not result in a material
adverse Federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (v) unless First Union is the surviving entity, the
Seller shall have delivered to the Eligible Lender Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Eligible Lender Trustee and Indenture Trustee,
respectively, in the Financed Student Loans and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests.
SECTION 4.05. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder (provided that such reliance shall not limit in any way the Seller's
obligations under Section 3.02). The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 4.06. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any other Basic Document.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Amendment. This Agreement may be amended by the Seller and
the Eligible Lender Trustee, with the consent of the Indenture Trustee (such
consent not to be unreasonably withheld), but without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller and the
Eligible Lender Trustee, upon the satisfaction of the Rating Agency Condition,
with the consent of the Indenture Trustee (which consent shall not be
unreasonably withheld), the consent of the Noteholders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and the consent of
the Certificateholders of Certificates evidencing not less than a majority of
the Certificate Balance, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments with respect to Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Noteholders or the Certificateholders of which
are required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent (or, in the
case of the Rating Agencies, five Business Days prior thereto), the Eligible
Lender Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Eligible Lender Trustee and the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Eligible Lender Trustee's or the Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
SECTION 5.02. Protection of Interests in Trust. (a) The Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee in the Financed
Student Loans and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Eligible Lender Trustee and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) The Seller shall not 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 Section 9-402(7) of the UCC, unless it shall
have given the Eligible Lender Trustee and the Indenture Trustee at least five
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) The Seller shall have an obligation to give the Eligible Lender Trustee
and the Indenture Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment.
(d) The Seller shall deliver to the Eligible Lender Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement, an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Eligible
Lender Trustee and the Indenture Trustee in the Financed Student Loans, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cutoff Date, an Opinion of Counsel, dated as of a date during such 120-day
period, either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and the Indenture Trustee in the Financed Student Loans, and reciting
the details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest; provided,
however, that a single Opinion of Counsel may be delivered in satisfaction of
the foregoing requirement and that of Section 3.06(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify (as of the date of such opinion and given all applicable laws as in
effect on such date) any action necessary to be taken in the following year to
preserve and protect such interest.
(e) The Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 5.03. Notices. All demands, notices and communications upon or to
the Seller, the Eligible Lender Trustee, the Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, (or in the form of telex or
facsimile notice, followed by written notice delivered as aforesaid) and shall
be deemed to have been duly given upon receipt (a) in the case of the Seller, to
First Union National Bank, 102 Pennsylvania Avenue, Avondale, PA 19311,
Attention: [Senior Vice President], (telephone: (---) ----------); facsimile:
(---) ----------), (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 Fitch,
to Fitch Investors Service, L.P., One State Street Plaza, New York, NY 10004,
Attention: Asset Backed Surveillance (telephone: 212---------; facsimile:
212---------), and (e) in the case of Moody's, to Moody's Investors Service,
Inc. 99 Church Street, New York, NY 10007, Attention: ABS Monitoring Department,
(telephone: 212-553-0300; facsimile: 212-553-4600); or, as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 5.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.04, this Agreement may not be
assigned by the Seller. This Agreement may only be assigned by the Eligible
Lender Trustee to its permitted successor pursuant to the Trust Agreement.
SECTION 5.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Eligible
Lender Trustee and for the benefit of the Certificateholders, the Indenture
Trustee and the Noteholders, as third party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 5.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 5.07. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 5.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 5.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 5.10. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant by the
Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of a security interest in all right, title and interest of the
Issuer in, to and under the Financed Student Loans and/or the assignment of any
or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 5.11. Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement, the Seller and the Eligible Lender Trustee shall not, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
SECTION 5.12. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by The First National Bank of Chicago
not in its individual capacity but solely in its capacity as Eligible Lender
Trustee of the Issuer and in no event shall The First National Bank of Chicago
in its individual capacity or, except as expressly provided in the Trust
Agreement, as beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto as to all of which recourse shall be had solely to the assets of
the Issuer.
(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.
<PAGE>
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.
FIRST UNION STUDENT LOAN TRUST 1997-1,
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee on
behalf of the Trust
By:----------------------------
Name: -------------------------
Title: ------------------------
FIRST UNION NATIONAL BANK,
as Seller
By:----------------------------
Name: -------------------------
Title: ------------------------
THE FIRST NATIONAL BANK OF CHICAGO, not
in its individual capacity but solely
as Eligible Lender Trustee
By:----------------------------
Name: -------------------------
Title: ------------------------
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in
its individual capacity but solely as Indenture Trustee,
By:----------------------------
Name: -------------------------
Title: ------------------------
<PAGE>
SCHEDULE A
Schedule of Financed Student Loans
<PAGE>
SCHEDULE B
Location of Financed Student Loan Files
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Sale Agreement, dated as of June
1, 1997 (the "Sale Agreement"), among the undersigned, as seller (the "Seller")
and as administrator (the "Administrator"), First Union Student Loan Trust
1997-1 (the "Trust") and The First National Bank of Chicago, not in its
individual capacity but solely as Eligible Lender Trustee (the "Eligible Lender
Trustee"), the undersigned does hereby sell, assign, transfer and otherwise
convey unto the Eligible Lender Trustee on behalf of the Trust, without recourse
(subject to the obligations set forth in the Sale Agreement), all right, title
and interest of the undersigned in and to (i) the Financed Student Loans and all
obligations of the Obligors thereunder, including all monies paid thereunder on
or after the Cutoff Date, and (ii) the proceeds of any and all of the foregoing
(including proceeds derived from the voluntary or involuntary conversion of any
of the Financed Student Loans into cash or other liquidated property, such as
proceeds from the applicable Guarantee Agreement). The foregoing sale does not
constitute and is not intended to result in any assumption by the Eligible
Lender Trustee or the Trust of any obligation of the Seller to the borrowers of
Financed Student Loans or any other person in connection with the Financed
Student Loans or any agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Financed Student Loan described in
Schedule A to the Sale Agreement in favor of the Eligible Lender Trustee on
behalf of the Trust, without recourse (subject to the obligations set forth in
the Sale Agreement) against the undersigned. This endorsement may be effected by
attaching a facsimile hereof to each or any of such promissory notes.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Sale
Agreement and is to be governed by the Sale Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Indenture, which also contains rules as to
usage that shall be applicable herein.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of June ----, 1997.
FIRST UNION NATIONAL BANK,
as Seller
By:----------------------------
Name: -------------------------
Title: ------------------------
<TABLE>
<CAPTION>
<S> <C>
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY LENDER AGREEMENT FOR GUARANTEE OF STUDENT LOANS
NATIONAL GUARANTY AGREEMENT WITH FEDERAL REINSURANCE (for loans to students
and parents of students pursuant to the Higher
Education Act of 1965, as amended)
</TABLE>
WHEREAS The First National Bank of Chicago, not in its individual
capacity but solely as Eligible Lender Trustee on behalf of the
First Union Student Loan Trust 1997-1 pursuant to the Trust
Agreement dated as of June __, 1997, between First Union
National Bank and the Eligible Lender Trustee, as the same may
be amended, including by way of amendment and restatement, from
time to time (the "Trust Agreement") (Corporate Name)
Located at One First National Plaza, Suite 0126, Attention: Corporate Trust
Administration
(Street Address)
Chicago Illinois 60670
(City) (State) (Zip Code)
hereinafter referred to as the "Lender," wishes to be able to
secure guarantee of loans made to students pursuing programs of
higher or vocational education at eligible institutions, and to
parents of such students pursuant to the aforementioned federal
legislation, hereinafter referred to as the "Act;" and
WHEREAS, the Pennsylvania Higher Education Assistance Agency, hereinafter
referred to as the "Agency," was created by the Act of August 7, 1963, P.L. 549
for the purpose of improving higher educational opportunities and to that end
the Agency is empowered to guarantee loans; and
WHEREAS, the Lender wishes to participate in the Agency's National Guaranty
Program.
NOW THEREFORE, it is mutually agreed that:
1. Within such limits as may be set by it, the Agency shall guarantee the
full amount of all loans made by the Lender, or for loans with a first
disbursement on or after October 1, 1993, no less than 98% of the full
amount of all loans, including principal and interest, made by the
Lender, except that all loans continue to be 100% guaranteed in the
event of death, disability or bankruptcy regardless of disbursement
date, which are eligible for such guarantee under the Act, the
regulations issued under the Act and the Rules and Regulations and
policies of the Agency with the exception of those pertaining to
Pennsylvania Residency/Domicile, which Act, regulations, Rules and
Regulations and policies as they may be from time to time amended are
made part of this Agreement.
2. The Agency shall guarantee loans without regard to sex, age, race,
color, religion, handicapped status, income, national origin or any
other basis prohibited by applicable law and the Lender will not
discriminate in the making of loans to eligible borrowers or in the
treatment of such borrowers on any prohibited basis.
3. On all loans guaranteed, the Agency agreed to obtain maximum
reinsurance by means of an agreement with the Federal Government
pursuant to the Act.
4. The Lender authorizes the Agency to act as its representative with
respect to retaining the school's statement of the student's
enrollment and need. This document will be retained for the five-year
period as required of the Lender by federal regulations.
5. The Lender shall designate its Servicer to maintain for all loans
guaranteed a system of records and accounts, shall afford access
thereto, and shall furnish such periodic and separate reports as may
reasonably be required by the U.S. Secretary of Education and the
Agency, under the Act, regulations, Rules and Regulations and policies
identified above. For loans paid in full or otherwise discharged, the
records shall be retained by the Lender as required by the Act,
regulations, Rules and Regulations, and policies identified above.
6. The Agency agrees to purchase eligible loans made by the Lender
provided that such loans are in default (as defined by the Act,
regulations, Rules and Regulations and policies identified above); the
loan was made in accordance with the Act, regulations, Rules and
Regulations and policies identified above; the Lender has otherwise
exercised due diligence in the making, servicing, and collection of
such loans; and, title to the loan note has been subrogated to the
Agency by the Lender.
7. Failure of the Lender to comply with the terms hereof with respect to
an individual loan shall not invalidate the guarantee of the Agency to
the Lender with respect to other loans held in compliance with the
terms of this Agreement.
8. In making loans under the Act, the Lender will undertake to secure
such reductions in borrowers' obligations to pay interest on loans
held by the Lender as they may be eligible to receive under the Act
and regulations. The Lender further agrees to comply with all
applicable Federal and State laws in originating guaranteed student
loans.
9. The Agency agrees to maintain at all times reserve levels which comply
with Section 428(c)(10) of the Higher Education Act, as amended.
10. This Agreement may be terminated by the Lender upon sixty (60) days
written notice. The Agency may limit, suspend or terminate this
Agreement in the manner provided for by the Agency Rules and
Regulations. All rights, duties and obligations hereunder shall
immediately cease upon termination, except the rights and obligations
of the parties which existed as of the date of termination.
11. The Lender wishes to participate in the following programs: (Please
check all applicable programs)
|_| Stafford
|_| PLUS
|_| SLS
|_| Consolidation
12. The Agency agrees to reimburse the Lender for any federal special
allowance payments lost with respect to an individual loan as a result
of a delay in payment of a claim under this Agreement by the Agency to
the Lender with respect to such loan.
13. The Agency agrees upon written request to furnish a copy of its most
recent audited financial statements to any holder of record of Notes
or Certificates (each as defined in Appendix A to the Indenture) of
First Union Student Loan Trust 1997-1.
<PAGE>
IN WITNESS WHEREOF, the Lender and the Agency have caused this Agreement to be
duly executed and delivered this __ day of June, 1997.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
By:__________________________________
Title
THE FIRST NATIONAL BANK OF CHICAGO, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS ELIGIBLE LENDER
TRUSTEE ON BEHALF OF FIRST UNION STUDENT LOAN
TRUST 1997-1
By:____________________________________
Authorized Signature
Title:
D.E. Lender Code Number: 833220
Federal Tax Identification Number
36-7111819
<TABLE>
<CAPTION>
<S> <C>
Approved as to form and legality this _____ day of Approved as to form and legality this _____ day of
__________, 1997 __________, 1997
- ------------------------------ -------------------------------
PHEAA Chief Counsel Deputy Attorney General
</TABLE>
June 10, 1997
First Union Student Loan Trust 1997-1
c/o The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Re: First Union Student Loan Trust 1997-1 Asset-Backed Securities
Ladies and Gentlemen:
We have acted as your counsel in connection with the Registration Statement
(Registration No. 333-26405) filed with the Securities and Exchange Commission
(the "Commission") on May 2, 1997, as amended by Amendment No. 1 thereto filed
with the Commission on June 10, 1997 (as amended, the "Registration Statement"),
pursuant to the Securities Act of 1933, as amended (the "Act"). The Registration
Statement covers the Floating Rate Class A-1 Asset-Backed Notes (the "Class A-1
Notes"), the Floating Rate Class A-2 Asset-Backed Notes (the "Class A-2 Notes"
and, together with the Class A-1 Notes, the "Notes"), and the Floating Rate
Asset Backed Certificates (the "Certificates" and, together with the Notes, the
"Securities") to be sold by First Union Student Loan Trust 1997-1 (the "Trust").
The Notes will be issued pursuant to an indenture (the "Indenture") between the
Trust and Bankers Trust Company, as indenture trustee (the "Indenture Trustee").
The Certificates will be issued pursuant to a trust agreement (the "Trust
Agreement") to be entered into between First Union National Bank (the "Seller")
and The First National Bank of Chicago, as eligible lender trustee (the
"Eligible Lender Trustee").
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Seller, we have assumed that such parties had or will have the power and
authority, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such parties of such documents
and the validity and binding effect thereof. As to any facts material to the
opinions expressed herein which we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Seller and others. Capitalized terms used and not
otherwise defined herein have the respective meanings set forth in Appendix A to
the form of Indenture filed as an exhibit to the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. Assuming that the Notes have been validly authorized and executed by the
Eligible Lender Trustee on behalf of the Trust, the Notes, when authenticated by
the Indenture Trustee, issued in accordance with the provisions of the
Indenture, will constitute valid and binding obligations of the Trust
enforceable in accordance with their terms and entitled to the benefits of the
Indenture, except that enforceability thereof may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) and the discretion of the court.
2. Assuming that the Certificates have been validly authorized and executed
by the Eligible Lender Trustee on behalf of the Trust, the Certificates, when
issued in accordance with the provisions of the Trust Agreement and delivered to
and paid for by the Underwriters pursuant to the Underwriting Agreement, will be
validly issued, fully paid and nonassessable and the issuance of such
Certificates will not be subject to any preemptive or similar rights.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
This consent is not to be construed as an admission that we are a person whose
consent is required to be filed with the Registration Statement under the
provisions of the Act.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
June 10, 1997
First Union Student Loan Trust 1997-1
c/o The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Re: First Union Student Loan Trust 1997-1 Asset Backed Securities
Ladies and Gentlemen:
In connection with the Registration Statement (Registration No. 333-26405)
filed with the Securities and Exchange Commission (the "Commission") on May 2,
1997, (the "Registration Statement"), pursuant to the Securities Act of 1933, as
amended (the "Act"). The Registration Statement covers the Floating Rate Class
A-1 Asset-Backed Notes (the "Class A-1 Notes"), the Floating Rate Class A-2
Asset-Backed Notes (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes"), and the Floating Rate Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") to be sold by
First Union Student Loan Trust 1997-1 (the "Trust"). The Notes will be issued
pursuant to an indenture (the "Indenture") between the Trust and Bankers Trust
Company, as indenture trustee (the "Indenture Trustee"). The Certificates will
be issued pursuant to a trust agreement (the "Trust Agreement") to be entered
into between the Seller and The First National Bank of Chicago, as eligible
lender trustee (the "Eligible Lender Trustee"). You have requested our opinion
regarding certain descriptions of Federal income tax consequences contained in
the Registration Statement with respect to the First Union Student Loan Trust
1997-1. Capitalized terms used and not otherwise defined herein have the
respective meanings set forth in Appendix A to the Indenture filed as an exhibit
to the Registration Statement.
Our opinion is based on an examination of the Prospectus, the form of the
Indenture, the form of the Trust Agreement, the form of the Administration
Agreement, the form of the Master Servicing Agreement, the form of the Sale
Agreement, and such other documents, instruments and information as we have
considered necessary, and assumes that all representations contained therein are
correct, that the parties thereto comply with the terms thereof and that such
documents and instruments will not be amended. Our opinion is also based upon
the Internal Revenue Code of 1986, as amended, administrative rulings, judicial
decisions, Treasury regulations and other applicable authorities. The statutory
provisions, regulations and interpretations on which our opinion is based are
subject to changes, and such changes could apply retroactively. In addition,
there can be no assurance that positions contrary to those stated in our opinion
may not be taken by the Internal Revenue Code of 1986, as amended,
administrative rulings, judicial decisions, Treasury regulations and other
applicable authorities. The statutory provisions, regulations and
interpretations on which our opinion is based are subject to changes, and such
changes could apply retroactively. In addition, there can be no assurance that
positions contrary to those stated in our opinion may not be taken by the
Internal Revenue Service.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. As to any facts material to the opinions expressed herein which were
not independently established or verified, we have relied upon statements,
representations, and certifications of officers and other representatives of the
Seller and others.
Based on the foregoing, we hereby confirm that the statements in the
Prospectus under the heading "Material Federal Income Tax Consequences," subject
to the qualifications set forth therein, accurately describe the material
Federal income tax consequences to holders of offered Certificates and Notes,
under existing law and the assumptions stated therein.
We express no opinion with respect to the matters addressed in this letter
other than as set forth above.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name in the Prospectus under the headings
"Material Federal Income Tax Consequences." In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of any subsequent changes of the facts stated or assumed herein or
any subsequent changes in applicable law.
Very truly yours,
/s/Cadwalader, Wickersham & Taft
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
First Union Student Loan Trust 1997-1
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1147033
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification no.)
c/o THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0126
CHICAGO, ILLINOIS 60670
(Address, including zip code of
principal executive offices)
First Union Student Loan Trust 1997-1
Floating Rate Asset Backed Notes
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of Amendment
of the Organization Certificate of Bankers Trust
Company dated June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1 Statement,
Registration No. 33-65171, and Certificate of Amendment
of the Organization Certificate of Bankers Trust
Company dated March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended
on February 18, 1997, Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 333-24509-01.
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of Bankers
Trust Company dated as of December 31, 1996.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 16th day
of May, 1997.
BANKERS TRUST COMPANY
By: /s/ Louis Bodi
--------------
Louis Bodi
Vice President
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks December 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------
ASSETS / / / / / / / / / / /
<S> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): / / / / / / / / / / /
a. Noninterest-bearing balances and currency and coin(1) .....................0081 1,545,000 1.a.
b. Interest-bearing balances(2) ..............................................0071 2,494,000 1.b.
2. Securities: / / / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B, column A) ................1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ..............1773 4,368,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell / / / / / / / / / / /
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs: / / / / / / / / / / /
a. Federal funds sold .........................................................0276 3,651,000 3.a
b. Securities purchased under agreements to resell ............................0277 3,230,000 3.b.
4. Loans and lease financing receivables: / / / / / / / / / / /
a. Loans and leases, net of unearned income
(from Schedule RC-C) RCFD 2122 27,239,000 / / / / / / / / / / / 4.a.
b. LESS: Allowance for loan and lease losses
RCFD 3123 917,000 / / / / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve
RCFD 3128 0 / / / / / / / / / / / 4.c.
d. Loans and leases, net of unearned income, / / / / / / / / / / /
allowance, and reserve (item 4.a minus 4.b and 4.c) ........................2125 28,889,000 4.d.
5. Assets held in trading accounts ..................................................3545 38,272,000 5.
6. Premises and fixed assets (including capitalized leases) .........................2145 914,000 6.
7. Other real estate owned (from Schedule RC-M) .....................................2150 213,000 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) .............................................................2130 184,000 8.
9. Customers' liability to this bank on acceptances outstanding .....................2155 597,000 9.
10. Intangible assets (from Schedule RC-M) ...........................................2143 17,000 10.
11. Other assets (from Schedule RC-F) ................................................2160 6,056,000 11.
12. Total assets (sum of items 1 through 11) .........................................2170 90,430,000 12.
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State ZIP: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------
LIABILITIES / / / / / / / / / / /
<S> <C> <C> <C> <C>
13. Deposits: / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I) RCON 2200 11,985,000 13.a.
(1) Noninterest-bearing(1)...RCON 6631 2,734,000 / / / / / / / / / / / 13.a.(1)
(2) Interest-bearing ........RCON 6636 6,657,000 / / / / / / / / / / / 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs / / / / / / / / / / /
(from Schedule RC-E part II) RCFN 2200 22,619,000 13.b (1)
(1) Noninterest-bearing ....RCFN 6631 654,000 / / / / / / / / / / /
(2) Interest-bearing .......RCFN 6636 22,731,000 / / / / / / / / / / / 13.b.(2)
14. Federal funds purchased and securities sold under agreements to / / / / / / / / / / /
repurchase in domestic offices of the bank and of its Edge and / / / / / / / / / / /
Agreement subsidiaries, and in IBFs: / / / / / / / / / / /
a. Federal funds purchased ...........................................RCFD 0278 6,560,000 14.a
b. Securities sold under agreements to repurchase ....................RCFD 0279 120,000 14.b
15. a. Demand notes issued to the U.S. Treasury ..........................RCON 2840 0 15.a
b. Trading liabilities ...............................................RCFD 3548 19,172,000 15.b
16. Other borrowed money: / / / / / / / / / / /
a. With original maturity of one year or less ........................RCFD 2332 15,909,000 16.a
b. With original maturity of more than one year ......................RCFD 2333 3,097,000 16.c
17. Mortgage indebtedness and obligations under capitalized leases ...........RCFD 2910 31,000 17.
18. Bank's liability on acceptances executed and outstanding .................RCFD 2920 597,000 18.
19. Subordinated notes and debentures ........................................RCFD 3200 1,229,000 19.
20. Other liabilities (from Schedule RC-G) ...................................RCFD 2930 5,235,000 20.
21. Total liabilities (sum of items 13 through 20) ...........................RCFD 2948 85,554,000 21.
22. Limited-life preferred stock and related surplus .........................RCFD 3282 0 22.
EQUITY CAPITAL / / / / / / / / / / /
23. Perpetual preferred stock and related surplus ............................RCFD 3838 600,000 23.
24. Common stock .............................................................RCFD 3230 1,001,000 24.
25. Surplus (exclude all surplus related to preferred stock) .................RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves ............................RCFD 3632 3,131,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities ........................................................RCFD 8434 ( 14,000) 26.b
27. Cumulative foreign currency translation adjustments ......................RCFD 3284 ( 382,000) 27.
28. Total equity capital (sum of items 23 through 27) ........................RCFD 3210 4,876,000 28.
29. Total liabilities, limited-life preferred stock, and equity capital / / / / / / / / / / /
(sum of items 21, 22, and 28) ............................................RCFD 3300 90,430,000 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for Number
the bank by independent external auditors as of any date during 1995 .......RCFD 6724 N/A M
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 21st day of March in the Year of our Lord one thousand nine hundred
and ninety-six.
Peter M. Philbin
------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation shall
have authority to issue and to increase the amount of its authorized capital
stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), divided into
One Hundred Million, One Hundred Sixty Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
/s/James T. Byrne, Jr.
---------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
---------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
/s/Lea Lahtinen
---------------
Lea Lahtinen
Sworn to before me this 20th day of March, 1996.
Sandra L. West
- ------------------------------
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
