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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 7, 1999
EDUCATION LOANS INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 333-85963 91-1819974
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
105 First Avenue Southwest, Aberdeen, South Dakota
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(Address of principal executive offices)
Registrant's telephone number, including area code: (605) 622-4400
Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
---------------------------------
Not applicable.
Item 2. Acquisition or Disposition of Assets.
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Not applicable.
Item 3. Bankruptcy or Receivership.
---------------------------
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not applicable.
Item 5. Other Events.
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Not applicable.
Item 6. Resignations of Registrant's Directors.
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Not applicable.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
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(c) Exhibits.
The following is filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulation S-K.
Exhibit No.*
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4.1 Indenture of Trust between Education Loans Incorporated
and U.S. Bank National Association, as Trustee, dated as
of December 1, 1999
4.2 First Supplemental Indenture of Trust between Education
Loans Incorporated and U.S. Bank National Association, as
Trustee, dated as of December 1, 1999
4.3 Auction Agent Agreement by and among Education Loans
Incorporated, as Issuer, U.S. Bank National Association,
as Trustee, and Bankers Trust Company, as Auction Agent
dated as of December 1, 1999 Relating to $126,300,000
Education Loans Incorporated Student Loan Asset-Backed
Notes Senior Series 1999-A and B and Subordinate Series
1999-C
10.1 Servicing and Administration Agreement among Education
Loans Incorporated, as Issuer, Student Loan Finance
Corporation, as Servicer and Administrator and U.S. Bank
National Association, as Trustee dated as of December 1,
1999
10.3 Transfer Agreement from GOAL Funding, Inc. and U.S. Bank
National Association, as Trustee to U.S. Bank National
Association, as Trustee and Education Loans Incorporated
dated as of December 1, 1999
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* Numbers correspond to a similarly numbered exhibit filed by the registrant on
its registration statement (SEC File No. 333-85963).
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
EDUCATION LOANS INCORPORATED
By:/s/ A. Norgrin Sanderson
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A. Norgrin Sanderson
President and Treasurer
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EXHIBIT 4.1
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================================================================================
INDENTURE OF TRUST
between
EDUCATION LOANS INCORPORATED
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
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Dated as of December 1, 1999
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CROSS REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1)......................................................... 7.13
(a)(2)......................................................... 7.13
(a)(3)......................................................... 7.12
(a)(4)......................................................... N.A.(2)
(a)(5)......................................................... 7.13
(b)............................................................ 7.8; 7.13
(c)............................................................ N.A.
311(a)............................................................ 7.14
(b)............................................................ 7.14
(c)............................................................ N.A.
312(a)............................................................ 12.1
(b)............................................................ 12.2
(c)............................................................ 12.2
313(a)............................................................ 12.4
(b)(1)......................................................... 12.4
(b)(2)......................................................... 12.4
(c)............................................................ 13.4
(d)............................................................ 12.4
314(a)............................................................ 12.3
(b)............................................................ 13.12;13.13
(c)(1)......................................................... 1.4
(c)(2)......................................................... 1.4
(c)(3)......................................................... 1.4
(d)............................................................ 1.4
(e)............................................................ 1.4
(f)............................................................ 1.4
315(a)............................................................ 7.1
(b)............................................................ 7.3; 13.4
(c)............................................................ 7.1
(d)............................................................ 7.1
(e)............................................................ 6.11
316(a)(last sentence)............................................. 1.1
(a)(1)(A)...................................................... 6.4
(a)(1)(B)...................................................... 6.13
(a)(2)......................................................... N.A.
(b)............................................................ 6.9
(c)............................................................ N.A.
317(a)(1)......................................................... 6.3
(a)(2)......................................................... 6.10
(b)............................................................ 7.17
318(a)............................................................ 13.11
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(1) Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
(2) N.A. means Not Applicable.
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TABLE OF CONTENTS
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Page
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PARTIES.................................................................... vii
RECITALS................................................................... vii
GRANTING CLAUSES........................................................... viii
ARTICLE ONE-- DEFINITIONS AND GENERAL PROVISIONS........................... 1-1
Section 1.1. Definitions ............................................. 1-1
Section 1.2. Definitions of General Terms............................. 1-25
Section 1.3. Computations............................................. 1-26
Section 1.4. Compliance Certificates and Opinions, etc................ 1-26
Section 1.5. Evidence of Action by the Corporation.................... 1-28
Section 1.6. Exclusion of Notes Held By or For the
Corporation.............................................. 1-29
Section 1.7. Exhibits................................................. 1-29
Section 1.8. Incorporation by Reference of Trust Indenture Act........ 1-29
ARTICLE TWO -- NOTE FORMS.................................................. 2-1
Section 2.1. Forms Generally.......................................... 2-1
Section 2.2. Form of Notes............................................ 2-1
ARTICLE THREE -- THE NOTES................................................. 3-1
Section 3.1. General Title............................................ 3-1
Section 3.2. General Limitations; Issuable in Series; Purposes
and Conditions for Issuance; Payment of
Principal and Interest................................... 3-1
Section 3.3. Terms of Particular Series............................... 3-3
Section 3.4. Form and Denominations................................... 3-3
Section 3.5. Execution, Authentication and Delivery................... 3-4
Section 3.6. Temporary Notes.......................................... 3-4
Section 3.7. Registration, Transfer and Exchange...................... 3-4
Section 3.8. Mutilated, Destroyed, Lost and Stolen Notes.............. 3-6
Section 3.9. Interest Rights Preserved; Dating of Notes............... 3-7
Section 3.10. Persons Deemed Holders................................... 3-7
Section 3.11. Cancellation............................................. 3-7
Section 3.12. Class B and Class C Notes................................ 3-8
ARTICLE FOUR -- CREATION OF FUNDS AND ACCOUNTS; CREDITS
THERETO AND PAYMENTS THEREFROM........................... 4-1
Section 4.1. Creation of Funds and Accounts........................... 4-1
Section 4.2. Acquisition Fund......................................... 4-1
Section 4.3. Administration Fund...................................... 4-4
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Section 4.4. Reserve Fund............................................. 4-6
Section 4.5. Indemnification Fund..................................... 4-8
Section 4.6. Revenue Fund............................................. 4-8
Section 4.7. Note Fund................................................ 4-10
Section 4.7.1. Interest Account......................................... 4-11
Section 4.7.2. Principal Account........................................ 4-14
Section 4.7.3. Retirement Account....................................... 4-18
Section 4.8. Surplus Fund............................................. 4-19
Section 4.9. Alternative Loan Guarantee Fund.......................... 4-25
Section 4.10. Pledge................................................... 4-26
Section 4.11. Investments.............................................. 4-27
Section 4.12. Transfer of Investment Securities........................ 4-30
Section 4.13. Termination.............................................. 4-30
ARTICLE FIVE -- COVENANTS TO SECURE NOTES;
REPRESENTATIONS AND WARRANTIES.......................... 5-1
Section 5.1. Trustee to Hold Financed Student Loans................... 5-1
Section 5.2. Credit Enhancement Facilities, Demand Purchase
Agreements and Swap Agreements........................... 5-1
Section 5.3. Enforcement and Amendment of Guarantee
Agreements............................................... 5-2
Section 5.4. Trustee to Hold Alternative Loan Notes................... 5-2
Section 5.5. Acquisition, Collection and Assignment of
Student Loans............................................ 5-2
Section 5.6. Enforcement of Financed Student Loans.................... 5-3
Section 5.7. Servicing and Other Agreements........................... 5-3
Section 5.8. Administration and Collection of Financed Student
Loans.................................................... 5-4
Section 5.9. Books of Account; Annual Audit........................... 5-4
Section 5.10. Punctual Payments........................................ 5-4
Section 5.11. Further Assurances....................................... 5-5
Section 5.12. Protection of Security; Power To Issue Notes
and Pledge Revenues and Other Funds...................... 5-5
Section 5.13. No Encumbrances.......................................... 5-6
Section 5.14. Use of Trustee Eligible Lender Number.................... 5-6
Section 5.15. Limitation on Administrative Expenses and
Note Fees; Reports....................................... 5-6
Section 5.16. Continuing Existence; Merger and Consolidation........... 5-6
Section 5.17. Fidelity Bonds........................................... 5-7
Section 5.18. Amendment of Student Loan Purchase
Agreements............................................... 5-7
Section 5.19. Enforcement and Amendment of
Guarantee Agreements..................................... 5-8
Section 5.20. Amendment of Remarketing Agreements
and Depositary Agreements................................ 5-8
Section 5.21. Additional Covenants of the Corporation.................. 5-8
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Section 5.22. Representations and Warranties of the Corporation........ 5-11
Section 5.23. Trustee to Furnish Monthly Servicing Report.............. 5-12
Section 5.24. Change in Name or State of Incorporation of Corporation.. 5-12
Section 5.25. Enforcement of Bailment Agreements....................... 5-13
ARTICLE SIX -- DEFAULTS AND REMEDIES...................................... 6-1
Section 6.1. Events of Default........................................ 6-1
Section 6.2. Acceleration............................................. 6-2
Section 6.3. Other Remedies; Rights of Beneficiaries.................. 6-5
Section 6.4. Direction of Proceedings by Acting
Beneficiaries Upon Default............................... 6-6
Section 6.5. Waiver of Stay or Extension Laws......................... 6-6
Section 6.6. Application of Moneys.................................... 6-6
Section 6.7. Remedies Vested in Trustee............................... 6-9
Section 6.8. Limitation on Suits by Beneficiaries..................... 6-10
Section 6.9. Unconditional Right of Noteholders To
Enforce Payment.......................................... 6-10
Section 6.10. Trustee May File Proofs of Claims........................ 6-10
Section 6.11. Undertaking for Costs.................................... 6-11
Section 6.12. Termination of Proceedings............................... 6-11
Section 6.13. Waiver of Defaults and Events of Default................. 6-12
Section 6.14. Inspection of Books and Records.......................... 6-12
ARTICLE SEVEN -- FIDUCIARIES............................................. 7-1
Section 7.1. Acceptance of the Trustee................................ 7-1
Section 7.2. Fees, Charges and Expenses of the Trustee, Paying
Agents, Note Registrar, Authenticating Agents,
Deposit Agents, Remarketing Agents, Depositaries,
Auction Agents and Broker-Dealers........................ 7-3
Section 7.3. Notice to Beneficiaries if Default Occurs................ 7-4
Section 7.4. Intervention by Trustee.................................. 7-4
Section 7.5. Successor Trustee, Paying Agents, Authenticating
Agents, Deposit Agents and Depositaries.................. 7-4
Section 7.6. Resignation by Trustee, Paying Agents,
Authenticating Agents, Deposit Agents
and Depositaries......................................... 7-5
Section 7.7. Removal of Trustee....................................... 7-5
Section 7.8. Appointment of Successor Trustee......................... 7-5
Section 7.9. Concerning any Successor Trustee......................... 7-6
Section 7.10. Trustee Protected in Relying Upon Resolutions,
Etc. .................................................... 7-6
Section 7.11. Successor Trustee as Custodian of Funds.................. 7-6
Section 7.12. Co-Trustee............................................... 7-6
Section 7.13. Corporate Trustee Required; Eligibility;
Disqualification......................................... 7-8
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Section 7.14. Preferential Collection of Claims Against
Corporation.............................................. 7-9
Section 7.15. Statement by Trustee of Funds and Accounts
and Other Matters........................................ 7-9
Section 7.16. Trustee, Authenticating Agent, Note
Registrar, Paying Agents, Deposit Agents,
Remarketing Agents, Depositaries, Auction Agents
and Broker-Dealers May Buy, Hold, Sell or
Deal in Notes............................................ 7-9
Section 7.17. Authenticating Agent and Paying Agents;
Paying Agents To Hold Moneys in Trust.................... 7-9
Section 7.18. Removal of Authenticating Agent
and Paying Agents; Successors............................ 7-10
Section 7.19. Appointment and Qualifications of Deposit Agents......... 7-11
Section 7.20. Appointment and Qualifications of Depositaries........... 7-12
Section 7.21. Remarketing Agents....................................... 7-13
Section 7.22. Qualifications of Remarketing Agents..................... 7-14
ARTICLE EIGHT -- SUPPLEMENTAL INDENTURES................................. 8-1
Section 8.1. Supplemental Indentures Not Requiring Consent
of Beneficiaries......................................... 8-1
Section 8.2. Supplemental Indentures Requiring Consent
of Beneficiaries......................................... 8-2
Section 8.3. Rights of Trustee........................................ 8-3
Section 8.4. Rating Agency Confirmation
Required Prior to Execution of Supplemental
Indenture................................................ 8-3
Section 8.5. Consent of Depositaries.................................. 8-3
Section 8.6. Consent of Remarketing Agents............................ 8-4
Section 8.7. Consent of Auction Agents................................ 8-4
Section 8.8. Consent of Broker-Dealers................................ 8-4
Section 8.9. Conformity With Trust Indenture Act...................... 8-4
ARTICLE NINE -- NOTEHOLDERS' MEETINGS.................................... 9-1
Section 9.1. Purposes for Which Noteholders' Meetings
May Be Called............................................ 9-1
Section 9.2. Place of Meetings of Noteholders......................... 9-1
Section 9.3. Call and Notice of Noteholders' Meetings................. 9-1
Section 9.4. Persons Entitled To Vote at Noteholders' Meetings........ 9-2
Section 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings.................................. 9-2
Section 9.6. Counting Votes and Recording Action of Meetings.......... 9-3
Section 9.7. Revocation by Noteholders ............................... 9-3
ARTICLE TEN -- REDEMPTION AND PREPAYMENT................................. 10-1
Section 10.1. Right of Redemption and Prepayment....................... 10-1
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Section 10.2. Election to Redeem, Prepay or Purchase;
Notice to Trustee; Senior Asset Requirement.............. 10-1
Section 10.3. Selection by Trustee of Notes To Be Redeemed............. 10-2
Section 10.4. Notice of Redemption..................................... 10-2
Section 10.5. Notes Payable on Redemption Date and Sinking
Fund Payment Date........................................ 10-3
Section 10.6. Notes Redeemed or Prepaid in Part........................ 10-3
Section 10.7. Purchase of Notes........................................ 10-4
ARTICLE ELEVEN -- DEFEASANCE; MONEYS HELD FOR PAYMENT
OF DEFEASED NOTES..................................... 11-1
Section 11.1. Discharge of Liens and Pledges; Notes No Longer
Outstanding and Deemed To Be Paid Hereunder.............. 11-1
Section 11.2. Notes Not Presented for Payment When Due;
Moneys Held for the Notes after Due Date
of Notes................................................. 11-3
ARTICLE TWELVE -- NOTEHOLDERS' LISTS AND REPORTS......................... 12-1
Section 12.1. Note Registrar To Furnish Trustee Names
and Addresses to Noteholders............................. 12-1
Section 12.2. Preservation of Information; Communications
to Noteholders........................................... 12-1
Section 12.3. Reports by Corporation................................... 12-1
Section 12.4. Reports by Trustee....................................... 12-2
ARTICLE THIRTEEN -- MISCELLANEOUS......................................... 13-1
Section 13.1. Consent, Etc., of Noteholders............................ 13-1
Section 13.2. Limitation of Rights..................................... 13-1
Section 13.3. Severability............................................. 13-1
Section 13.4. Notices.................................................. 13-2
Section 13.5. Counterparts............................................. 13-3
Section 13.6. Indenture Constitutes a Security Agreement............... 13-3
Section 13.7. Payments Due on Non-Business Days........................ 13-3
Section 13.8. Notices to Rating Agencies............................... 13-3
Section 13.9. Governing Law............................................ 13-3
Section 13.10. Rights of Other Beneficiaries ........................... 13-3
Section 13.11. Conflict with Trust Indenture Act ....................... 13-3
Section 13.12. Opinions as to Trust Estate ............................. 13-3
Section 13.13. Recording of Indenture .................................. 13-4
Section 13.14. No Petition ............................................. 13-4
Section 13.15. Income Tax Characterization ............................. 13-4
SIGNATURES................................................................. 13-5
EXHIBIT A Eligible FFELP Loan Acquisition Certificate.............. A-1
EXHIBIT B Eligible FFELP Loan Origination Certificate.............. B-1
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EXHIBIT C Student Loan Acquisition Certificate..................... C-1
EXHIBIT D Form of Updating Eligible FFELP Loan Acquisition
Certificate.............................................. D-1
EXHIBIT E Eligible Alternative Loan Acquisition Certificate........ E-1
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<PAGE>
THIS INDENTURE OF TRUST, dated as of December 1, 1999, between
EDUCATION LOANS INCORPORATED, a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Corporation"), and U.S.
BANK NATIONAL ASSOCIATION, a national banking association duly established,
existing and authorized to accept and execute trusts of the character herein set
out under and by virtue of the laws of the United States (herein called the
"Trustee");
RECITALS OF THE CORPORATION
WHEREAS, the Trustee has entered into certain contracts and agreements,
herein identified, with the Secretary of Education (hereinafter, together with
the former United States Commissioner of Education, referred to as the
"Secretary of Education") and each Guarantee Agency (as hereinafter defined), to
provide an insurance or guarantee program for student loans incurred under the
Higher Education Act of 1965, as amended, and the regulations promulgated by the
United States Department of Education thereunder (hereinafter referred to as the
"Higher Education Act"), that the Trustee on behalf of the Corporation may
acquire with the proceeds of the sale of the Corporation's bonds, notes or other
obligations, and it is contemplated that the Trustee may in the future enter
into comparable agreements with other Guarantee Agencies; and
WHEREAS, each Guarantee Agency has entered into agreements with the
Secretary of Education for the payment by the Secretary of Education of amounts
authorized to be paid pursuant to the Higher Education Act, including
reimbursement of certain amounts to be paid upon certain defaulted student loans
guaranteed or insured by such Guarantee Agency, and interest subsidy payments
and Special Allowance Payments to holders of loans guaranteed or insured by such
Guarantee Agency, and it is contemplated that any other Guarantee Agency as
described in the preceding paragraph will enter into comparable agreements; and
WHEREAS, the Corporation has duly authorized the execution and delivery
of this Indenture to provide for the issuance of its Notes, to be issued in one
or more series (hereinafter referred to as the "Notes") and for the purposes as
in this Indenture provided; and
WHEREAS, all things necessary to make the Notes, when executed by the
Corporation and authenticated and delivered by the Trustee hereunder, the valid
obligations of the Corporation, and to make this Indenture a valid agreement of
the Corporation in accordance with their and its terms, have been done;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
The Corporation, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Notes by the Holders thereof, the execution and delivery of any Swap
Agreement (as hereinafter defined) by any Swap Counterparty (as hereinafter
defined), the execution and delivery of any Credit Enhancement Facility (as
hereinafter defined) by any Credit Facility Provider (as hereinafter defined),
the execution and delivery of any Demand Purchase Agreement (as hereinafter
defined) by any Credit Facility Provider, and the acknowledgment thereof by the
Trustee, in order to secure the payment of the principal of, premium, if any,
and interest on and any Carry-Over
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Amounts (and accrued interest thereon) with respect to the Notes according to
their tenor and effect and the performance and observance by the Corporation of
all the covenants expressed or implied herein and in the Notes and in any such
Swap Agreement, Credit Enhancement Facility or Demand Purchase Agreement, does
hereby grant to the Trustee, and to its successors in trust, and to them and
their assigns, forever, a security interest in the following:
GRANTING CLAUSE FIRST
All rights, title, interest and privileges of the Corporation (1) with
respect to Financed Student Loans, in, to and under the Federal Reimbursement
Contracts, any Servicing Agreement, the Student Loan Purchase Agreements
(including, but not limited to, those agreements described in Exhibits H-1 and
H-2 to the First Supplemental Indenture), the Transfer Agreements, any
Non-Delivery Fees and the Guarantee Agreements, (2) in, to and under all
Financed Student Loans (including the evidences of indebtedness thereof and
related documentation), the proceeds of the sale of the Notes (until expended
for the purpose for which the Notes were issued) and the revenues, moneys,
evidences of indebtedness and securities (including any earnings thereon) in and
payable into the Acquisition Fund, Note Fund, Revenue Fund, Reserve Fund,
Administration Fund, Indemnification Fund, Alternative Loan Guarantee Fund and
Surplus Fund, in the manner and subject to the prior applications provided in
Article Four hereof, and (3) in, to and under any Credit Enhancement Facility,
any Demand Purchase Agreement, any Swap Agreement, any Swap Counterparty
Guarantee, any Depositary Agreement, any Remarketing Agreement, any Auction
Agent Agreement and any Broker-Dealer Agreement, all as hereinbefore and
hereinafter defined, including any contract or any evidence of indebtedness or
other rights of the Corporation to receive any of the same whether now existing
or hereafter coming into existence, and whether now or hereafter acquired;
GRANTING CLAUSE SECOND
All proceeds from any property described in these Granting Clauses and
any and all other property of every name and nature from time to time hereafter
by delivery or by writing of any kind conveyed, pledged, assigned or
transferred, as and for additional security hereunder by the Corporation or by
anyone in its behalf or with its written consent to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and
its successors in said trust and to them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trust herein set forth (i)
for the equal and proportionate benefit, security and protection of all present
and future Senior Beneficiaries (as hereinafter defined), without privilege,
priority or distinction as to lien or otherwise of any of the Senior
Beneficiaries over any of the other, (ii) for the equal and proportionate
benefit, security and protection of all present and future Subordinate
Beneficiaries (as hereinafter defined), without privilege, priority or
distinction as to the lien or otherwise of any of the Subordinate Beneficiaries
over any of the other, but on a basis subordinate to the Senior
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<PAGE>
Beneficiaries on the terms described herein, and (iii) for the equal and
proportionate benefit, security and protection of all present and future Holders
of Class C Notes (as hereinafter defined), but on a basis subordinate to the
Senior Beneficiaries and the Subordinate Beneficiaries on the terms described
herein;
PROVIDED, HOWEVER, that if the Corporation, its successors or assigns,
shall well and truly pay, or cause to be paid, the principal of and premium, if
any, on the Notes and the interest and any Carry-Over Amounts (and accrued
interest thereon) with respect thereto due and to become due thereon, or provide
fully for payment thereof as herein provided, at the times and in the manner
mentioned in the Notes, according to the true intent and meaning thereof, and
shall make the payments into the Trust Funds as required under Article Four
hereof, or shall provide, as permitted hereby, for the payment thereof by
depositing with the Trustee sums sufficient for payment of the entire amount due
and to become due thereon as herein provided, and shall well and truly keep,
perform and observe all the covenants and conditions pursuant to the terms of
this Indenture to be kept, performed and observed by it, and shall pay to the
Trustee, any Swap Counterparty and any Credit Facility Provider all sums of
money due or to become due to them in accordance with the terms and provisions
hereof, then (except as provided in Section 4.5 hereof or otherwise provided in
a Supplemental Indenture) this Indenture and the rights hereby granted shall
cease, terminate and be void; otherwise, this Indenture shall be and remain in
full force and effect.
NOW, THEREFORE, it is mutually covenanted and agreed for the benefit of
all Holders of the Notes and for the benefit of any Swap Counterparty and any
Credit Facility Provider, as follows:
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<PAGE>
ARTICLE ONE
DEFINITIONS AND GENERAL PROVISIONS
Section 1.1. Definitions. In this Indenture the following terms have
the following respective meanings unless the context hereof clearly requires
otherwise:
"Account" shall mean any of the Accounts created or established by this
Indenture.
"Accountant" shall mean Eide Helmeke PLLP, Certified Public
Accountants, Aberdeen, South Dakota, any other registered or certified public
accountant or firm of such accountants duly licensed to practice and practicing
as such under the laws of the State, selected and paid by the Corporation, who
is Independent and not under the domination of the Corporation, but who may be
regularly retained to make annual or similar audits of the books or records of
the Corporation.
"Acquisition Fund" shall mean the Acquisition Fund created and
established by Section 4.1 hereof.
"Acting Beneficiaries Upon Default" shall mean, as such term is used in
Article Six hereof:
(a) at any time that any Senior Obligations are Outstanding,
(i) for purposes of clause (i) of Section 6.2(A)
hereof, (x) the Holders of a majority in aggregate Principal
Amount of Class A Notes Outstanding or (y) (unless the Trustee
shall, in its sole discretion, determine that acceleration of
the maturity of the Outstanding Notes is not in the overall
interest of the Senior Beneficiaries) any Other Senior
Beneficiary,
(ii) for purposes of clause (ii) of Section 6.2(A)
hereof, (x) the Holders of one hundred percent (100%) in
aggregate Principal Amount of Class A Notes Outstanding, or
(y) (unless the Trustee shall, in its sole discretion,
determine that acceleration of the maturity of the Outstanding
Notes is not in the overall interest of the Senior
Beneficiaries) all Other Senior Beneficiaries,
(iii) for purposes of Sections 6.2(B), 6.3, 6.4 and
6.13 hereof, (x) the Holders of a majority in aggregate
Principal Amount of the Class A Notes Outstanding, unless the
Trustee shall have received or shall thereafter receive
conflicting requests or directions from one or more Other
Senior Beneficiaries; or (y) any Other Senior Beneficiary,
unless the Trustee shall, in its sole discretion, determine
that the requesting action is not in the overall interest of
the Senior Beneficiaries or shall have received or shall
thereafter receive conflicting requests or directions from one
or more Other Senior Beneficiaries or the Holders of a
majority in aggregate Principal Amount of the Class A Notes
Outstanding; and
1-1
<PAGE>
(iv) for all other purposes hereunder, the Holders of
a majority in aggregate Principal Amount of Class A Notes
Outstanding or any Other Senior Beneficiary;
(b) at any time that no Senior Obligations are Outstanding but
Subordinate Obligations are Outstanding,
(i) for purposes of clause (i) of Section 6.2(A)
hereof, (x) the Holders of a majority in aggregate Principal
Amount of Class B Notes Outstanding or (y) (unless the Trustee
shall, in its sole discretion, determine that acceleration of
the maturity of the Outstanding Notes is not in the overall
interest of the Subordinate Beneficiaries) any Other
Subordinate Beneficiary,
(ii) for purposes of clause (ii) of Section 6.2(A)
hereof, (x) the Holders of one hundred percent (100%) in
aggregate Principal Amount of Class B Notes Outstanding or (y)
(unless the Trustee shall, in its sole discretion, determine
that acceleration of the maturity of the Outstanding Notes is
not in the overall interest of the Subordinate Beneficiaries)
all Other Subordinate Beneficiaries,
(iii) for purposes of Sections 6.2(B), 6.3, 6.4 and
6.13 hereof, (x) the Holders of a majority in aggregate
Principal Amount of the Class B Notes Outstanding, unless the
Trustee shall have received or shall thereafter receive
conflicting requests or directions from one or more Other
Subordinate Beneficiaries, or (y) any Other Subordinate
Beneficiaries, unless the Trustee shall, in its sole
discretion, determine that the requested action is not in the
overall interest of the Subordinate Beneficiaries or shall
have received or shall thereafter receive conflicting requests
or directions from one or more Other Subordinate Beneficiaries
or the Holders of a majority in aggregate Principal Amount of
the Class B Notes Outstanding; and
(iv) for all other purposes hereunder, the Holders of
a majority in aggregate Principal Amount of Class B Notes
Outstanding or any Other Subordinate Beneficiary; and
(c) at any time that no Senior Obligations are Outstanding and
no Subordinate Obligations are Outstanding, for all purposes hereunder,
the Holders of a majority in aggregate Principal Amount of Class C
Notes Outstanding.
"Administration Fund" shall mean the Administration Fund created and
established by Section 4.1 hereof.
"Administrative Expenses" shall mean the Corporation's actual expenses,
excluding Note Fees but including Servicing Fees and any other expenses of the
Corporation incurred in connection with the servicing of Financed Student Loans
(including any cost of conversion of one Servicer to another), of carrying out
and administering its powers, duties and functions under (1) its articles of
incorporation, its bylaws, the Student Loan Purchase Agreements, any Servicing
Agreement, any Bailment Agreement, the Guarantee Agreements, the
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Program, the Higher Education Act, any Alternative Loan Program or any
requirement of the laws of the United States with respect to the Program, as
such powers, duties and functions relate to Financed Student Loans, (2) any Swap
Agreement, Credit Enhancement Facility or Demand Purchase Agreement (other than
amounts payable thereunder which constitute Other Obligations), (3) any
Remarketing Agreement, Depositary Agreement, Auction Agent Agreement or Broker-
Dealer Agreement, and (4) this Indenture. Such expenses may include, without
limiting the generality of the foregoing, salaries, supplies, utilities,
mailing, labor, materials, office rent, maintenance, furnishings, equipment,
machinery, telephones, travel expenses, insurance premiums, and legal,
accounting, management, consulting and banking services and expenses, and
payments for pension, retirement, health and hospitalization and life and
disability insurance benefits; but shall not include (i) debt service on the
Notes or any other bonds, notes or other evidences of indebtedness of the
Corporation, (ii) amounts payable under any Other Obligation or (iii) Costs of
Issuance or the fees, costs or expenses of the Corporation with respect to any
other bonds, notes or indebtedness of the Corporation.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, shall mean 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.
"Aggregate Value" shall mean on any calculation date the sum of the
Values of all assets of the Trust Estate, less moneys in any Fund or Account
which the Corporation is then entitled to receive for deposit into the
Indemnification Fund but has not yet removed from the Trust Estate, and less any
funds to be used to pay Costs of Issuance unless, under the provisions of a
Supplemental Indenture, such funds are not to be applied to the payment of Costs
of Issuance to the extent the Senior Asset Requirement would not be met after
such payment.
"Alternative Loan Guarantee Fund" shall mean the Fund by that name
created and established by Section 4.1 hereof.
"Alternative Loan Program" shall mean each program for the making of
Student Loans other than FFELP Loans that is identified in a Supplemental
Indenture as a program the Alternative Loans under which are eligible to be
Financed under this Indenture.
"Alternative Loans" shall mean Student Loans that are originated under
Alternative Loan Programs.
"Auction Agent" shall mean, with respect to any series of Notes, any
bank, national banking association or trust company designated as such with
respect to such Notes pursuant to the provisions of a Supplemental Indenture,
and its successor or successors, and any bank, national banking association or
trust company at any time substituted in its place pursuant to such Supplemental
Indenture.
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"Auction Agent Agreement" shall mean, with respect to any series of
Notes, an agreement among an Auction Agent, the Trustee and the Corporation
setting forth the rights and obligations of the Auction Agent acting in such
capacity with respect to such Notes under this Indenture and the related
Supplemental Indenture, including any supplement thereto or amendment thereof
entered into in accordance with the provisions thereof.
"Authenticating Agent," when used with respect to a series of Notes,
shall mean a bank or trust company appointed for the purpose of receiving,
authenticating and delivering Notes of that series in connection with transfers,
exchanges and registrations as in this Indenture provided, and its successor or
successors and any other bank or trust company which may at any time be
substituted in its place as Authenticating Agent pursuant to this Indenture.
"Authorized Officer," when used with reference to the Corporation,
shall mean the chairman of the Board, the president, any vice president, the
secretary or other person designated in writing to the Trustee from time to time
by the Board.
"Bailment Agreement" shall mean any agreement among the Corporation,
the Trustee and a bailee, including the Servicer or any sub-servicer, providing
for the bailee to act as the agent of the Trustee in perfecting the Trustee's
security interest in Financed FFELP Loans, including any supplement thereto or
amendment thereof entered into in accordance with the provisions thereof.
"Balance," when used with reference to any Account or Fund, shall mean
the aggregate sum of all assets standing to the credit of such Account or Fund,
including, without limitation, Investment Securities computed at the Value of
Investment Securities; Notes purchased with moneys standing to the credit of
such Fund or Account computed at the Principal Amount of such Notes; Financed
Student Loans computed at the Principal Balance thereof; and lawful money of the
United States; provided, however, that (1) the Balance of the Interest Account
shall not include amounts standing to the credit thereof which are being held
therein for (A) the payment of past due and unpaid interest on Notes, or (B) the
payment of interest on Notes that are deemed no longer Outstanding as a result
of the defeasance thereof pursuant to subparagraph (ii) of the first paragraph
of Section 11.1 hereof, and (2) the Balances of the Principal Account and the
Retirement Account shall not include amounts standing to the credit thereof
which are being held therein for the payment of principal of or premium, if any,
on Notes which are deemed no longer Outstanding in accordance with the
provisions of subparagraph (ii) of the first paragraph of Section 11.1 hereof.
"Beneficiaries" shall mean, collectively, all Senior Beneficiaries, all
Subordinate Beneficiaries and all Holders of any Outstanding Class C Notes.
"Board" shall mean the Board of Directors of the Corporation.
"Board Resolution" shall mean a copy of a resolution certified by the
secretary or an assistant secretary of the Corporation to have been duly adopted
by the Board and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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"Broker-Dealer" shall mean, with respect to any series of Notes, any
broker or dealer (each as defined in the Securities Exchange Act of 1934, as
amended), commercial bank or other entity permitted by law to perform the
functions required of a broker-dealer set forth in the auction procedures
relating to such Notes, designated as such with respect to such Notes pursuant
to the provisions of a Supplemental Indenture, and its successor or successors,
and any broker or dealer, commercial bank or other entity at any time
substituted in its place pursuant to such Supplemental Indenture.
"Broker-Dealer Agreement" shall mean, with respect to any series of
Notes, an agreement between an Auction Agent and a Broker-Dealer, and approved
by the Corporation, setting forth the rights and obligations of the
Broker-Dealer acting in such capacity with respect to such Notes under this
Indenture and the related Supplemental Indenture, including any supplement
thereto or amendment thereof entered into in accordance with the provisions
thereof.
"Budgeted Administrative Expenses" shall mean, with respect to each
Fiscal Year, subject to the provisions of Section 5.15 hereof, an amount of
Administrative Expenses budgeted by the Corporation for such Fiscal Year, as
evidenced by a Board Resolution adopted prior to the commencement of such Fiscal
Year; provided that such Budgeted Administrative Expenses shall not exceed (and,
in the absence of a Board Resolution with respect thereto, shall be assumed to
be equal to) the amount of Administrative Expenses permitted to be paid, or
reimbursed to the Corporation, from the Administration Fund pursuant to any
Supplemental Indenture providing for the issuance of a series of Notes.
"Business Day" shall mean, except as otherwise provided in a
Supplemental Indenture, a day of the year other than a Saturday, a Sunday or a
day on which banks located in the city in which the Principal Office of the
Trustee is located, in the city in which the Principal Office of any
Authenticating Agent is located, in the city in which the Principal Office of
any Paying Agent (other than the Trustee) is located, in the city in which the
Principal Office of any Auction Agent is located, or in the city in which the
Principal Office of any Depositary is located, are required or authorized by law
to remain closed, or on which The New York Stock Exchange is closed.
"Carry-Over Amount" shall mean, if and to the extent specifically
provided for as such in a Supplemental Indenture with respect to a series of
Variable Rate Notes, the amount, if any, by which (i) the interest payable on
such series with respect to a given interest period is exceeded by (ii) the
interest that otherwise would have been payable with respect to such interest
period but for a limitation on the interest rate for such interest period based
upon the anticipated return on Financed Student Loans, together with the unpaid
portion of any such excess from prior interest periods. To the extent required
by a Supplemental Indenture providing for any Carry-Over Amount, interest will
accrue on such Carry-Over Amount until paid. Any reference to "principal" or
"interest" in this Indenture and in the related Notes shall not include, within
the meanings of such words, any Carry-Over Amount or any interest accrued on any
Carry-Over Amount.
"Cash Flow Projection" shall mean a projection as to future revenues
and cash flow through the final Stated Maturity of the Outstanding Notes based
upon existing facts and, to
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the extent not so based, upon assumptions accepted by each Rating Agency
(including, without limitation, assumptions relating to variable rates of
interest under Swap Agreements, Credit Enhancement Facilities and Demand
Purchase Agreements and on any Notes) and the following assumptions: (1) a
thirty (30)-day lag in receipt of borrower payments, and a sixty (60)-day lag in
receipt of federal payments, with respect to Financed Student Loans; (2) no
prepayments of principal of Financed Student Loans; (3) bond-equivalent rates of
91-day or 52-week U.S. Treasury bills (for purposes of determining returns on
Financed Student Loans that are based upon such rates or averages thereof) equal
to known rates (or averages) for such time as they are known, and thereafter
equal to five and two-tenths percent (5.2%) per annum; and (4) a reinvestment
rate of five and two-tenths percent (5.2%) per annum. The foregoing assumptions
may, pursuant to a Supplemental Indenture as provided in Section 8.1(h) hereof,
be replaced with or supplemented by such other reasonable assumptions as will
not result in the withdrawal or reduction of the then-current rating of any of
the Unenhanced Outstanding Notes, as evidenced by written confirmation to that
effect from each Rating Agency, or, if no Unenhanced Notes are then Outstanding,
but Other Obligations are Outstanding, as are acceptable to the Other
Beneficiaries holding such Other Obligations, as evidenced in writing to the
Trustee by each such Other Beneficiary.
"Class A Notes" shall mean any Notes designated in a Supplemental
Indenture as Class A Notes, which are secured under this Indenture on a basis
senior to any Subordinate Obligations and any Class C Notes (as such seniority
is described in Section 3.12 hereof), and on a parity with Other Senior
Obligations.
"Class B Notes" shall mean any Notes designated in a Supplemental
Indenture as Class B Notes, which are secured under this Indenture on a basis
subordinate to any Senior Obligations (as such subordination is described in
Section 3.12 hereof and elsewhere herein), on a parity with Other Subordinate
Obligations but on a basis senior to any Class C Notes (as such seniority is
described in Section 3.12 hereof and elsewhere herein).
"Class C Notes" shall mean any Notes designated in a Supplemental
Indenture as Class C Notes, which are secured under this Indenture subordinate
to any Senior Obligations and any Subordinate Obligations (as such subordination
is described in Section 3.12 hereof and elsewhere herein).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consolidation Loan" shall mean a Student Loan authorized under Section
428C of the Higher Education Act.
"Corporation" shall mean (1) Education Loans Incorporated, a
corporation duly organized and existing under the laws of the State of Delaware,
(2) any successor thereto under this Indenture, and (3) for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
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"Corporation Request," "Corporation Order," "Corporation Certificate"
or "Corporation Consent" shall mean, respectively, a written request, order,
certificate or consent signed in the name of the Corporation by an Authorized
Officer and delivered to the Trustee.
"Corporation Student Loan Purchase Agreements" shall mean all
agreements between the Corporation and a Lender (in the case of FFELP Loans) or
SLFC (in the case of Alternative Loans) providing for the sale by such Lender or
SLFC to the Corporation of Student Loans Financed or to be Financed under this
Indenture and substantially in the forms which are on file with the Trustee,
including amendments thereto made in accordance with Section 5.18 hereof.
"Corporation Swap Payment" shall mean a payment due to a Swap
Counterparty from the Corporation pursuant to the applicable Swap Agreement
(including, but not limited to, payments in respect of any early termination of
such Swap Agreement).
"Costs of Issuance" shall mean all items of expense directly or
indirectly payable by or reimbursable to the Corporation and related to the
authorization, sale and issuance of a series of the Notes, including, but not
limited to, printing costs, costs of preparation and reproduction of documents,
filing fees, initial fees and charges of the Trustee, any Authenticating Agent,
any Deposit Agent, any Remarketing Agent, any Depositary, any Auction Agent or
any Broker-Dealer, legal fees and charges, fees and disbursements of
underwriters, consultants and professionals, underwriters' discount, costs of
credit ratings, fees and charges for preparation, execution, transportation and
safekeeping of such Notes, other costs incurred by the Corporation in
anticipation of the issuance of such Notes and any other cost, charge or fee in
connection with the issuance of such Notes.
"Counsel" shall mean a person, or firm of which such a person is a
member, authorized in any state to practice law.
"Counterparty Swap Payment" shall mean a payment due to or received by
the Corporation from a Swap Counterparty pursuant to a Swap Agreement
(including, but not limited to, payments in respect of any early termination of
such Swap Agreement) and amounts received by the Corporation under any related
Swap Counterparty Guarantee.
"Credit Enhancement Facility" shall mean, if and to the extent provided
for in a Supplemental Indenture described in Section 8.1(i) hereof, with respect
to Notes of one or more series of the same class, an insurance policy insuring,
or a letter of credit or surety bond providing a direct or indirect source of
funds for, the timely payment of principal of and interest on such Notes (but
not necessarily principal due upon acceleration thereof under Section 6.2
hereof), and all agreements entered into by the Corporation or the Trustee with
respect thereto.
"Credit Facility Provider" shall mean, if and to the extent provided
for in a Supplemental Indenture entered into pursuant to Section 8.1(i), any
Person or Persons engaged by the Corporation (i) pursuant to a Demand Purchase
Agreement, to provide credit enhancement or liquidity for the Corporation's
obligation to repurchase or redeem Notes of one or more series of the same class
subject to a remarketing which have not been remarketed, or (ii) pursuant to a
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Credit Enhancement Facility, to provide credit enhancement for the payment of
the principal of and interest on any or all of the Notes of one or more series.
"Debt Service" shall mean: (1) with respect to any Notes, as of any
particular date and with respect to any particular period, the aggregate of the
moneys to be paid or set aside on such date or during such period for the
payment (or retirement) of the principal of, premium, if any, and interest on
Notes, after giving effect to any Corporation Swap Payments and Counterparty
Swap Payments, and (2) with respect to Other Obligations, as of any particular
date and with respect to any particular period, the aggregate of the moneys to
be paid or set aside on such date or during such period for the payment of
amounts payable by the Corporation under any Swap Agreements, Credit Enhancement
Facilities or Demand Purchase Agreements, including, inter alia, fees payable by
the Corporation to the Credit Facility Provider thereunder.
"Defaulted Interest" shall have the meaning given in Section 3.2
hereof.
"Deemed Tendered" shall mean, with respect to any Note, a Note deemed
tendered in accordance with the provisions of the Supplemental Indenture
providing for the issuance thereof.
"Demand Note" shall mean a Note required to be purchased by or on
behalf of the Corporation, at the option of the Holder thereof, upon receipt of
a Purchase Demand.
"Demand Purchase Agreement" shall mean any or all of the credit
facilities, reimbursement agreements, standby purchase agreements and the like,
pertaining to Notes of one or more series issued with a tender right granted to
or tender obligation imposed on the Holder thereof, if and to the extent
provided for in a Supplemental Indenture described in Section 8.1(i) hereof.
"Deposit Agent" shall mean any bank or banking association having trust
powers or trust company designated as such pursuant to the provisions of Section
7.19 hereof and its successor or successors and any other bank or banking
association having trust powers or trust company at any time substituted in its
place pursuant to this Indenture.
"Depositary" shall mean, with respect to any series of Notes, any
commercial bank or banking association having trust powers or trust company
designated as such with respect to such Notes pursuant to the provisions of
Section 7.20 hereof and its successor or successors and any other commercial
bank or banking association having trust powers or trust company at any time
substituted in its place pursuant to this Indenture.
"Depositary Agreement" shall mean an agreement among a Depositary, the
Trustee, the Corporation, any Remarketing Agent and/or any related Credit
Facility Provider setting forth the rights and obligations of the Depositary
acting in such capacity under this Indenture and otherwise meeting the
requirements of Section 7.20 hereof, including any supplement thereto or
amendment thereof entered into in accordance with the provisions thereof.
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"Eligible Alternative Loan Acquisition Certificate" shall mean a
certificate signed by an Authorized Officer of the Corporation and substantially
in the form attached as Exhibit E hereto.
"Eligible Borrower" shall mean a borrower who, in the case of a FFELP
Loan, is eligible under the Higher Education Act, or, in the case of an
Alternative Loan, is eligible under an Alternative Loan Program, to be the
obligor of a loan for financing a program of post-secondary education, including
a borrower who is eligible under the Higher Education Act to be an obligor of a
Plus Loan.
"Eligible FFELP Loan Acquisition Certificate" shall mean a certificate
signed by an Authorized Officer of the Corporation and substantially in the form
attached as Exhibit A hereto.
"Eligible FFELP Loan Origination Certificate" shall mean a certificate
signed by an Authorized Officer of the Corporation and substantially in the form
attached as Exhibit B hereto.
"Eligible Loan" shall mean: (A) a FFELP Loan which: (1) has been or
will be made to an Eligible Borrower for post-secondary education; (2) is
Guaranteed by a Guarantee Agency to the extent of not less than ninety-eight
percent (98%) of the principal thereof and all accrued interest thereon; (3) is
an "eligible loan" as defined in Section 438 of the Higher Education Act for
purposes of receiving Special Allowance Payments; and (4) bears interest at a
rate per annum not less than or in excess of the applicable rate of interest
provided by the Higher Education Act, or such lesser rates as may be approved by
each Rating Agency; or (B) any other Student Loan (including Alternative Loans)
if the Corporation shall have caused to be provided to the Trustee written
confirmation from each Rating Agency that treating such type of loan as an
Eligible Loan will not adversely affect any rating or ratings then applicable to
any of the Unenhanced Notes or, if no Unenhanced Notes are then Outstanding, but
Other Obligations are Outstanding, such Other Beneficiaries holding such Other
Obligations consent to the treatment of such type of loan an Eligible Loan, as
evidenced in writing to the Trustee by each such Other Beneficiary.
"Event of Default" shall mean one of the events described as such in
Section 6.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Federal Reimbursement Contract" shall mean any agreement between a
Guarantee Agency and the Secretary of Education providing for the payment by the
Secretary of Education of amounts authorized to be paid pursuant to the Higher
Education Act, including (but not necessarily limited to) reimbursement of
amounts paid or payable upon defaulted Financed Student Loans and other student
loans guaranteed or insured by the Guarantee Agency and interest subsidy
payments to holders of qualifying student loans guaranteed or insured by the
Guarantee Agency.
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"FFEL Program" shall mean the Federal Family Education Loan Program
established by the Higher Education Act pursuant to which loans are made to
borrowers pursuant to specified guidelines, and the repayment of such loans is
guaranteed by a guarantee agency, and any predecessor or successor program.
"FFELP Loans" shall mean Student Loans made under the FFEL Program or
the FISL Program.
"Financed," when used with respect to Student Loans or Eligible Loans,
shall mean Student Loans or Eligible Loans, as the case may be, acquired or
originated by the Trustee on behalf of the Corporation with moneys in the
Acquisition Fund or the Surplus Account, any Eligible Loans received in exchange
for Financed Student Loans upon the sale thereof or substitution therefor in
accordance with Section 4.2 hereof and any other Student Loans deemed to be
"Financed" with moneys in the Acquisition Fund and the Surplus Account pursuant
to this Indenture, but does not include (1) Student Loans released from the lien
of this Indenture and sold, as permitted in this Indenture, to any purchaser,
including a trustee for the holders of the Corporation's bonds, notes or other
evidences of indebtedness or (2) for certain purposes under this Indenture,
Liquidated Alternative Loans.
"Fiscal Year" shall mean the fiscal year of the Corporation as
established from time to time.
"FISL Program" shall mean the federal loan insurance program created
under the Higher Education Act whereby the Secretary of Education directly
insures the repayment of at least eighty percent (80%) of the principal of (or
in certain cases up to one hundred percent (100%) of the principal of and
accrued interest on) student loans under the Higher Education Act.
"Fitch" shall mean Fitch IBCA, Inc., its successors and their assigns,
and, if such partnership shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Fitch" shall be deemed to
refer to any other nationally recognized securities rating agency designated by
the Trustee, at the written direction of the Corporation.
"GOAL Funding" shall mean GOAL Funding, Inc., a corporation duly
organized and existing under the laws of the State of Delaware, its successors
and assigns.
"Government Obligations" shall mean direct obligations of, or
obligations the full and timely payment of the principal of and interest on
which are unconditionally guaranteed by, the United States of America.
"Guarantee" or "Guaranteed" shall mean, with respect to a FFELP Loan,
the insurance or guarantee by a Guarantee Agency, to the extent provided in the
Higher Education Act, of the principal of and accrued interest on such FFELP
Loan, and, where applicable, the coverage of such FFELP Loan by one or more
Federal Reimbursement Contracts providing, among other things, for reimbursement
to the Guarantee Agency for losses incurred by it on
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defaulted Financed Student Loans insured or guaranteed by the Guarantee Agency
to the extent provided in the Higher Education Act.
"Guarantee Agency" shall mean (1) Education Assistance Corporation, and
its successors and assigns, including, without limitation, the Secretary of
Education, (2) Pennsylvania Higher Education Assistance Agency, and its
successors and assigns, including, without limitation, the Secretary of
Education, (3) United Student Aid Funds, Inc., and its successors and assigns,
including, without limitation, the Secretary of Education, (4) Student Loans of
North Dakota, and its successors and assigns, including, without limitation, the
Secretary of Education, (5) Northwest Education Loan Association, and its
successors and assigns, including, without limitation, the Secretary of
Education, (6) Great Lakes Higher Education Corporation, and its successors and
assigns, including, without limitation, the Secretary of Education, (7)
Educational Credit Management Corporation (formerly known as Transitional
Guaranty Agency, Inc.), and its successors and assigns, including, without
limitation, the Secretary of Education, (8) Iowa College Aid Commission, and its
successors and assigns, including, without limitation, the Secretary of
Education, (9) Missouri Coordinating Board for Higher Education, and its
successors and assigns, including, without limitation, the Secretary of
Education, (10) Illinois Student Assistance Commission, and its successors and
assigns, including, without limitation, the Secretary of Education, (11)
California Student Aid Commission, and its successors and assigns, including,
without limitation, the Secretary of Education, (12) Oregon State Scholarship
Commission, and its successors and assigns, including, without limitation, the
Secretary of Education, (13) the Secretary of Education, to the extent the
Secretary of Education has directly insured or guaranteed FFELP Loans, or (14)
any other state agency or private nonprofit institution or organization which
administers a Guarantee Program, subject to confirmation of ratings on any
Outstanding Unenhanced Notes or, if no Unenhanced Notes are then Outstanding but
Other Obligations are Outstanding, consent of each Other Beneficiary holding
such Outstanding Other Obligations, as evidenced in writing to the Trustee by
each such Other Beneficiary.
"Guarantee Agreements" shall mean, collectively, (1) that certain
Lender Agreement for Guarantee of Student Loans With Federal Reinsurance, dated
July 3, 1997, and that certain Certificate of Comprehensive Insurance, dated
October 1, 1999, each between the Trustee and Education Assistance Corporation,
(2) that certain Lender Agreement for Guarantee of Student Loans With Federal
Reinsurance, dated February 28, 1994, between the Trustee and Pennsylvania
Higher Education Assistance Agency, (3) that certain Agreement to Guarantee
Loans, dated July 11, 1997, between the Trustee and United Student Aid Funds,
Inc., (4) that certain Lender Participation Agreement for Insurance, dated July
8, 1997, between the Trustee and Student Loans of North Dakota, (5) that certain
Agreement to Guarantee Loans, dated March 22, 1999, between the Trustee and
Northwest Education Loan Association, (6) that certain Student Loan Guaranty,
dated July 15, 1997, between the Trustee and Great Lakes Higher Education
Corporation, (7) that certain Agreement for Payment on Guarantee of Student
Loans With Federal Reinsurance, dated December 15, 1994, between the Trustee and
Educational Credit Management Corporation (formerly known as Transitional
Guaranty Agency, Inc.), (8) that certain Agreement to Guarantee Loans, dated
July 15, 1997, and that certain Agreement to Guarantee PLUS/SLS Loans, dated
July 15, 1997, each between the Trustee and Iowa College Aid Commission, (9)
that certain Agreement to Guarantee Federal Stafford Loans (Subsidized
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and Unsubsidized), Federal PLUS Loans, Federal SLS Loans, dated July 15, 1997,
between the Trustee and Missouri Coordinating Board for Higher Education, (10)
that certain Holder Agreement, dated July 7, 1997, between the Trustee and
Illinois Student Assistance Commission, (11) that certain Agreement to Guarantee
Loans Made by a Commercial Lender, dated July 10, 1997, that certain Agreement
to Guarantee CLAS Program Loans Made by a Commercial Lender, dated July 10,
1997, that certain Consolidation Loan Program Lender Participation Agreement,
dated July 6, 1997, each between the Trustee and California Student Aid
Commission, (12) that certain Agreement to Endorse Loans, dated April 8, 1999,
between the Trustee and Oregon State Scholarship Commission, and (13) any other
agreement between a Guarantee Agency and the Trustee providing for the insurance
or guarantee by such Guarantee Agency, to the extent provided in the Higher
Education Act, of the principal of and accrued interest on FFELP Loans acquired
by the Trustee from time to time, including any supplement thereto or amendment
thereof entered into in accordance with the provisions thereof and hereof.
"Guarantee Program" shall mean a Guarantee Agency's student loan
insurance program pursuant to which such Guarantee Agency guarantees or insures
FFELP Loans.
"Guaranteed Loan" shall mean a FFELP Loan which is Guaranteed.
"Higher Education Act" shall mean the Higher Education Act of 1965, as
amended or supplemented from time to time, and all regulations promulgated
thereunder.
"Holder," when used with respect to any Note, shall mean the Person in
whose name such Note is registered in the Note Register.
"Income Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Indemnification Fund" shall mean the Fund by that name created and
established by Section 4.1 hereof.
"Indenture" shall mean this Indenture of Trust, including any
supplement hereto or amendment hereof entered into in accordance with the
provisions hereof.
"Independent," when used with respect to any specified Person, shall
mean such a Person who (i) is in fact independent; (ii) does not have any direct
financial interest or any material indirect financial interest in the
Corporation, other than the payment to be received under a contract for services
to be performed by such Person; and (iii) is not connected with the Corporation
as an official, officer, employee, promoter, underwriter, trustee, partner,
affiliate, subsidiary, director or Person performing similar functions. Whenever
it is herein provided that any Independent Person's opinion or certificate shall
be furnished to the Trustee, such Person shall be appointed by the Corporation
or the Trustee, as the case may be, and such opinion or certificate shall state
that the signer has read this definition and that the signer is Independent
within the meaning hereof.
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"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 1.4, made by an
Independent appraiser or other expert appointed by a Corporation Order and
approved by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Initial Notes" shall mean the Notes of the initial twelve (12) series
hereunder issued contemporaneously with the execution and delivery of this
Indenture.
"Interest Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Interest Payment Date" shall mean each regularly scheduled interest
payment date on the Notes [which, except in the case of any Variable Rate Notes,
including those Initial Notes constituting Variable Rate Notes (as to which such
dates shall be specified in the Supplemental Indenture providing for the
issuance thereof), shall be each June 1 and December 1] or, with respect to the
payment of interest upon redemption or acceleration of a Note, purchase of a
Note by the Trustee on a Mandatory Tender Date (to the extent such Mandatory
Tender Date is designated as an Interest Payment Date in the related
Supplemental Indenture) or the payment of Defaulted Interest, such date on which
such interest is payable under this Indenture.
"Investment Securities" shall mean any of the following:
1. Government Obligations;
2. Interest-bearing time or demand deposits, certificates of
deposit or other similar banking arrangements with any bank, trust
company, national banking association or other depository institution
(including the Trustee or any of its affiliates), provided that, at the
time of deposit or purchase, if the investment is for a period
exceeding one year, such depository institution shall have long-term
unsecured debt rated by each Rating Agency not lower than in its
highest applicable Specific Rating Category or, if the investment is
for a period of less than one year, such depository institution shall
have short-term unsecured debt rated by each Rating Agency not lower
than its highest applicable Specific Rating Category;
3. Obligations issued or guaranteed as to principal and
interest by any of the following: (a) the Government National Mortgage
Association; (b) the Federal National Mortgage Association; or (c) the
Federal Farm Credit Banks, the Federal Intermediate Credit Banks, the
Export-Import Bank of the United States, the Federal Land Banks, the
Student Loan Marketing Association, the Federal Financing Bank, the
Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation or
the Farmers Home Administration, or any agency or instrumentality of
the United States of America which shall be established for the purpose
of acquiring the obligations of any of the foregoing or otherwise
providing financing therefor, provided that any such obligation
described in this clause (c) shall either be rated by Fitch or, if not
rated by Fitch, rated by Moody's, (i)
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if such obligation has a term of less than one year, not lower than in
its highest applicable Specific Rating Category, or (ii) if such
obligation has a term of one year or longer, not lower than in its
highest applicable Specific Rating Category;
4. Repurchase agreements with banks (which may include the
Trustee or any of its affiliates) which are members of the Federal
Deposit Insurance Corporation or with government bond dealers insured
by the Securities Investor Protection Corporation, which such
agreements are secured by securities which are Government Obligations
to a level sufficient to obtain a rating by each Rating Agency in its
highest Specific Rating Category, or with brokers or dealers whose
unsecured long-term debt is rated by each Rating Agency in its highest
Specific Rating Category. The Trustee will give written notice to each
Rating Agency of any investment in a repurchase agreement or reverse
repurchase agreement pursuant to this paragraph with a term greater
than one (1) year;
5. Any money market fund, including a qualified regulated
investment company described in Internal Revenue Service Notice 87-22,
1987-1 C.B. 466, rated by each Rating Agency not lower than its highest
applicable Specific Rating Category;
6. Any debt instrument; provided that such instrument has a
term of less than one year, is rated by each Rating Agency not lower
than in its highest applicable Specific Rating Category and notice of
such investment is given to each Rating Agency;
7. Any investment agreement which constitutes a general
obligation of a Person, or the obligations under which are
unconditionally guaranteed by a Person, whose debt, unsecured
securities, deposits or claims paying ability is rated by each Rating
Agency, (a) if such investment agreement has a term of less than one
year, not lower than in its highest applicable Specific Rating
Category, or (b) if such investment agreement has a term of one year or
longer, not lower than in its highest applicable Specific Rating
Category; and
8. Any other investment if the Trustee shall have received
written evidence from each Rating Agency that treating such investment
as an Investment Security will not cause any rating then applicable to
any Unenhanced Outstanding Notes to be lowered or withdrawn or, if no
Unenhanced Notes are then Outstanding, but Other Obligations are
Outstanding, is acceptable to such Other Beneficiaries, as evidenced in
writing to the Trustee by each such Other Beneficiary.
If any Investment Security described in clause (7) above has a term of one year
or longer, the Trustee shall give each Rating Agency written notice thereof.
"Joint Sharing Agreement" shall mean any agreement entered into in
accordance with Section 5.14(2) hereof.
"Lender" shall mean (1) as to a FFELP Loan, any "eligible lender" (as
defined in the Higher Education Act) which has received an eligible lender
designation from a Guarantee
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Agency, and (2) as to an Alternative Loan, any entity eligible to be a lender
under the related Alternative Loan Program.
"Liquidated Alternative Loan" shall mean a Financed Alternative Loan as
to which any payment has been delinquent for 180 days or more. At such time, and
for so long, as any such Financed Alternative Loan no longer has any payment
that has been delinquent for 180 days or more, such Financed Alternative Loan
shall cease to be a Liquidated Alternative Loan.
"Mandatory Tender Date" shall mean, with respect to any Note, a date on
which such Note is required to be tendered for purchase by or on behalf of the
Corporation in accordance with the provisions in the Supplemental Indenture
providing for the issuance thereof.
"Maturity," when used with respect to any Note, shall mean the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity thereof or by declaration of
acceleration, call for redemption or otherwise.
"Monthly Payment Date" shall mean the 15th day of each calendar month
(or, in the event such 15th day is not a Business Day, the next preceding
Business Day); provided that any transfers to be made from the Revenue Fund on a
Monthly Payment Date shall, as to amounts therein constituting payments in
respect of Financed Student Loans, include only such payments as have been
deposited in the Revenue Fund as of the last day of the preceding calendar
month.
"Monthly Servicing Report" shall mean the monthly report prepared by
the Servicer in accordance with any Servicing Agreement.
"Moody's" shall mean Moody's Investors Service, Inc., its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Trustee, at the written direction of the Corporation.
"Non-Delivery Fee" shall mean any fee received by the Corporation or
the Trustee from a Lender upon the failure of the Lender, in whole or in part,
to perform its obligation to sell Eligible Loans to the Corporation pursuant to
a Student Loan Purchase Agreement.
"Note Fees" shall mean the fees, costs and expenses, excluding Costs of
Issuance, of the Trustee and any Paying Agents, Authenticating Agent, Deposit
Agents, Remarketing Agents, Depositaries, Auction Agents, Broker-Dealers,
Counsel, Note Registrar, Accountants and other consultants and professionals
incurred by the Corporation in carrying out and administering its powers, duties
and functions under (1) its articles of incorporation, its bylaws, the Student
Loan Purchase Agreements, any Servicing Agreement, any Bailment Agreement, the
Guarantee Agreements, the Program, the Higher Education Act, any Alternative
Loan Program or any requirement of the laws of the United States or any State
with respect to the Program, as such powers, duties and functions relate to
Financed Student Loans, (2) any Swap Agreement, Credit Enhancement Facility or
Demand Purchase Agreement (other than any amounts payable
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thereunder which constitute Other Obligations), (3) any Remarketing Agreement,
Depositary Agreement, Auction Agent Agreement or Broker-Dealer Agreement and (4)
this Indenture.
"Note Fund" shall mean the Fund by that name created and established by
Section 4.1 hereof.
"Note Register" shall mean the register maintained by the Note
Registrar pursuant to Section 3.7 hereof.
"Note Registrar" shall mean the Trustee, or, if so designated pursuant
to the terms of a Supplemental Indenture, the Authenticating Agent, serving in
such capacity under the terms of this Indenture, unless and until a Corporation
Order is delivered to the Authenticating Agent and the Trustee directing that
the Authenticating Agent or the Trustee, as the case may be, become the Note
Registrar and the Authenticating Agent or the Trustee, as the case may be,
agrees to serve in such capacity hereunder.
"Noteholder" shall mean the Holder of any Note.
"Notes" shall mean all Notes issued pursuant to this Indenture in
accordance with the provisions of Article Three hereof.
"Other Beneficiary" shall mean an Other Senior Beneficiary or an Other
Subordinate Beneficiary.
"Other Obligations" shall mean, collectively, Other Senior Obligations
and Other Subordinate Obligations.
"Other Senior Beneficiary" shall mean a Person who is a Senior
Beneficiary other than as a result of ownership of Class A Notes.
"Other Senior Obligation" shall mean the Corporation's obligations to
pay any amounts under any Senior Swap Agreements, any Senior Credit Enhancement
Facilities and any Senior Demand Purchase Agreements.
"Other Subordinate Beneficiary" shall mean a Person who is a
Subordinate Beneficiary other than as a result of ownership of Class B Notes.
"Other Subordinate Obligation" shall mean the Corporation's obligations
to pay any amounts under any Subordinate Swap Agreements, any Subordinate Credit
Enhancement Facilities and any Subordinate Demand Purchase Agreements.
"Outstanding," (1) when used with respect to any Note, shall (a) have
the construction given to such word in Sections 1.6, 3.7 and 11.1 hereof, i.e.,
a Note shall not be Outstanding hereunder if such Note is at the time not deemed
to be Outstanding hereunder by reason of the operation and effect of Section
1.6, Section 3.7 or Section 11.1 hereof, and (b) not include any Note Deemed
Tendered; and (2) when used with respect to any Other Obligation,
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shall mean all Other Obligations which have become, or may in the future become,
due and payable and which have not been paid or otherwise satisfied.
"Paying Agent" shall mean the Trustee and any other commercial bank
designated herein or in accordance herewith as a place at which principal of,
premium, if any, or interest on any Note is payable.
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
"Plus Loan" shall mean a Student Loan made pursuant to Section 428B of
the Higher Education Act.
"Prepayment Date," when used with respect to any Note, a portion of the
Principal Amount of which is to be paid prior to its Stated Maturity, shall mean
the date fixed for such prepayment by or pursuant to this Indenture.
"Principal Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Principal Amount," when used with respect to a Note, shall mean the
original principal amount of such Note less all payments previously made to the
Holder thereof in respect of principal.
"Principal Balance," when used with respect to a Student Loan, shall
mean the unpaid principal amount thereof (including (a) with respect to a FFELP
Loan any unpaid capitalized interest thereon that is authorized to be
capitalized under the Higher Education Act for purposes of Special Allowance
Payments, federal interest subsidy payments, a borrower's liability to a lender
and the amount of the lender's loss on a guarantee or insurance claim, and (b)
with respect to an Alternative Loan, any unpaid interest thereon that is
authorized to be added to the principal balance thereof under the applicable
Alternative Loan Program) as of a given date.
"Principal Office" shall mean (i) when used with respect to the
Trustee, the principal office of the Trustee for the performance of its duties
as trustee hereunder, which office as of the date of execution of this Indenture
is located at the address specified in Section 13.4 hereof, and (ii) when used
with respect to a Paying Agent (other than the Trustee), an Authenticating
Agent, the Note Registrar, a Depositary, a Remarketing Agent, an Auction Agent
or a Broker-Dealer, such office designated in writing to the Trustee and the
Corporation as the location of its principal office for the performance of its
duties as Paying Agent, Authenticating Agent, Note Registrar, Depositary,
Remarketing Agent, Auction Agent or Broker-Dealer, as the case may be, under
this Indenture.
"Principal Payment Date" shall mean the Stated Maturity of principal of
any Serial Note and the Sinking Fund Payment Date for any Term Note, which,
unless otherwise
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specified with respect to any Variable Rate Notes, including those Initial Notes
constituting Variable Rate Notes, in the Supplemental Indenture providing for
the issuance thereof, shall occur on a June 1 or an December 1.
"Program" shall mean the program to be administered by the Servicer for
the purchase of Student Loans from Lenders, SLFC and GOAL Funding or origination
of Student Loans in order to increase the supply of moneys available for new
Student Loans, thereby assisting students in obtaining a post-secondary school
education.
"Purchase Date" shall mean, with respect to a Demand Note, the date
specified in a Purchase Demand (provided that such date is not less than the
required number of calendar days after receipt of such Purchase Demand by the
Depositary) as the date on which the Holder of the Demand Note identified in
such Purchase Demand is demanding purchase of such Note, or a specified portion
thereof, in accordance with the applicable provisions of the related
Supplemental Indenture, or the next preceding or succeeding Business Day, as
specified in such Supplemental Indenture, if such date is not a Business Day.
"Purchase Demand" shall mean, with respect to a Demand Note, a written
demand, in the form required by the related Supplemental Indenture, by the
Holder thereof that such Note, or, in the case of a partial purchase demand, a
specified portion thereof, be purchased in accordance with the applicable
provisions of such Supplemental Indenture.
"Rating Agency" shall mean any rating agency that shall have an
outstanding rating on any of the Notes pursuant to request by the Corporation.
"Rating Agency Condition" shall mean, with respect to any action, that
each of the Rating Agencies shall have notified the Corporation and the Trustee
in writing that such action will not result in a reduction, qualification or
withdrawal of the then-current rating of any of the Notes.
"Rating Category" shall mean one of the general rating categories of a
Rating Agency, without regard to any refinement or gradation of such rating
category by a numerical modifier or otherwise.
"Redemption Date," when used with respect to any Note to be redeemed,
shall mean the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
shall mean the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" shall mean, with respect to an Interest Payment
Date for any series of Notes, unless the Supplemental Indenture authorizing the
issuance of such series of Notes otherwise provides, the fifteenth day (whether
or not a Business Day) of the calendar month immediately preceding such Interest
Payment Date.
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"Remarketing Agent" shall mean, with respect to any series of Notes,
any securities dealer designated as such with respect to such Notes pursuant to
the provisions of Section 7.21 hereof and its successor or successors and any
securities dealer at any time substituted in its place pursuant to this
Indenture.
"Remarketing Agreement" shall mean an agreement between a Remarketing
Agent and the Corporation setting forth the rights and obligations of the
Remarketing Agent acting in such capacity under this Indenture and otherwise
meeting the requirements of Section 7.21 hereof, including any supplement
thereto or amendment thereof entered into in accordance with the provisions
thereof.
"Repayment Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Reserve Fund" shall mean the Reserve Fund created and established by
Section 4.1 hereof.
"Reserve Fund Requirement" shall mean, at any time, an amount equal to
the greater of (1) two percent (2.00%) of the aggregate Principal Amount of
Class A Notes and Class B Notes then Outstanding, and (2) $500,000; or, as
determined upon the issuance of any Class A Notes or any Class B Notes, such
lesser or greater amount as will not cause any Rating Agency to lower or
withdraw any rating on any Unenhanced Outstanding Notes, as confirmed in writing
to the Trustee by each Rating Agency or, if no Unenhanced Notes are then
Outstanding, but Other Obligations are Outstanding, and the Reserve Fund
Requirement is to be reduced, such lesser amount as is acceptable to the Other
Beneficiaries holding such Other Obligations, as evidenced in writing to the
Trustee by each such Other Beneficiary.
"Retirement Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Revenue Fund" shall mean the Revenue Fund created and established by
Section 4.1 hereof.
"Secretary of Education" shall mean the Commissioner of Education,
Department of Health, Education and Welfare of the United States, and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any other officer, board, body, commission or
agency succeeding to the functions thereof under the Higher Education Act.
"Senior Asset Requirement" shall mean, as of the date of determination,
that:
(a) the Senior Percentage is at least equal to one hundred ten
percent (110%) (or such lower percentage specified in a Corporation
Certificate delivered to the Trustee which, if Unenhanced Class A Notes
are Outstanding, shall not result in the lowering or withdrawal of the
outstanding rating assigned by any Rating Agency to any of the
Unenhanced Class A Notes Outstanding prior to such action being taken
by the
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Corporation, as evidenced in writing to the Trustee by each such Rating
Agency, or, if no Unenhanced Class A Notes are Outstanding but Other
Senior Obligations are Outstanding, is acceptable to the Other Senior
Beneficiaries holding such Other Senior Obligations, as evidenced in
writing to the Trustee by each such Other Senior Beneficiary), and
(b) the Subordinate Percentage is at least equal to one
hundred percent (100%) (or such lower percentage specified in a
Corporation Certificate delivered to the Trustee which, if Unenhanced
Class B Notes are Outstanding, shall not result in the lowering or
withdrawal of the outstanding rating assigned by any Rating Agency to
any of the Unenhanced Class B Notes Outstanding prior to such action
being taken by the Corporation, as evidenced in writing to the Trustee
by each such Rating Agency, or, if no Unenhanced Class B Notes are
Outstanding but Other Subordinate Obligations are Outstanding, is
acceptable to the Other Subordinate Beneficiaries holding such Other
Subordinate Obligations, as evidenced in writing to the Trustee by each
such Other Subordinate Beneficiary).
"Senior Beneficiaries" shall mean (1) the Holders of any Outstanding
Class A Notes, and (2) any Other Senior Beneficiary holding any Other Senior
Obligation that is Outstanding.
"Senior Credit Enhancement Facility" shall mean a Credit Enhancement
Facility designated as a Senior Credit Enhancement Facility in the Supplemental
Indenture pursuant to which such Credit Enhancement Facility is furnished by the
Corporation.
"Senior Credit Enhancement Provider" shall mean any Person who provides
a Senior Credit Enhancement Facility or a Senior Demand Purchase Agreement.
"Senior Demand Purchase Agreement" shall mean a Demand Purchase
Agreement designated as a Senior Demand Purchase Agreement in the Supplemental
Indenture pursuant to which such Demand Purchase Agreement is furnished by the
Corporation.
"Senior Obligations" shall mean, collectively, the Class A Notes and
any Other Senior Obligations.
"Senior Percentage" shall mean, as of the date of determination, the
percentage resulting by dividing the Aggregate Value by the sum of (i) the
aggregate Principal Amount of Outstanding Class A Notes plus accrued interest
thereon and (ii) accrued Corporation Swap Payments under Senior Swap Agreements
and (iii) other payments accrued and owing by the Corporation on Other Senior
Obligations.
"Senior Swap Agreement" shall mean a Swap Agreement designated as a
Senior Swap Agreement in the Supplemental Indenture pursuant to which such Swap
Agreement is furnished by the Corporation.
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"Senior Swap Counterparty" shall mean any Person who provides a Senior
Swap Agreement.
"Serial Notes" shall mean all Notes other than Term Notes.
"Servicer" shall mean SLFC, and any other organization with which the
Corporation and the Trustee have entered into a Servicing Agreement, subject to
confirmation of ratings on any then Outstanding Unenhanced Notes, as evidenced
by written confirmation to the Trustee to that effect from each Rating Agency,
or, if no Unenhanced Notes are then Outstanding but Other Obligations are
Outstanding, consent of each Other Beneficiary holding such Outstanding Other
Obligations, as evidenced in writing to the Trustee by each such Other
Beneficiary.
"Servicing Agreement" shall mean, the Servicing and Administration
Agreement, dated as of December 1, 1999, among the Corporation, the Trustee and
SLFC, as servicer and administrator, and any other agreement among the
Corporation, the Trustee and a Servicer under which the Servicer agrees to act
as the Corporation's agent in connection with the administration and collection
of Financed Student Loans in accordance with this Indenture.
"Servicing Fees" shall mean any fees payable by the Corporation to a
Servicer in respect of Financed Student Loans pursuant to the provisions of a
Servicing Agreement.
"Sinking Fund Payment Date" shall mean the date on which any Term Note
is to be called for redemption pursuant to subsection (A) or (B) of Section
4.7.2 hereof and the applicable provisions of the Supplemental Indenture
providing for the issuance thereof, or, if not redeemed, the Stated Maturity
thereof.
"SLFC" shall mean Student Loan Finance Corporation, a corporation duly
organized and existing under the laws of the State of South Dakota.
"SLS Loan" shall mean a Student Loan made pursuant to former Section
428A of the Higher Education Act.
"Special Allowance Payments" shall mean special allowance payments
authorized to be made by the Secretary of Education by Section 438 of the Higher
Education Act, or similar allowances authorized from time to time by federal law
or regulation.
"Special Record Date" shall mean, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.2 hereof.
"Special Redemption and Prepayment Account" shall mean the Account by
that name created and established by Section 4.1 hereof.
"Special Redemption and Prepayment Account Requirement" shall mean the
amount specified for a series of Notes in the Supplemental Indenture authorizing
the issuance of Notes of such series.
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"Specific Rating Category" shall mean a specific rating category of a
Rating Agency, taking into account any refinement or gradation of a Rating
Category by a numerical or other qualifier. For so long as any of the Notes are
rated by Moody's: (a) references to the highest applicable Specific Rating
Category shall be, with respect to obligations or investments having a term of
less than one year, to a rating of "P-1" (or, if Moody's revises its rating
schedule from time to time, such rating as Moody's shall advise the Trustee in
writing is comparable to "P-1" under such revised rating schedule), and with
respect to obligations or investments having a term of one year or longer, to a
rating of "Aaa" (or, if Moody's revises its rating schedule from time to time,
such rating as Moody's shall advise the Trustee in writing is comparable to
"Aaa" under such revised rating schedule); and (b) references to the third
highest applicable Specific Rating Category shall be, with respect to
obligations or investments having a term of one year or longer, to a rating of
"Aa2" (or, if Moody's revises its rating schedule from time to time, such rating
as Moody's shall advise the Trustee in writing is comparable to "Aa2" under such
revised rating schedule). For so long as any of the Notes are rated by Fitch:
(a) references to the highest applicable Specific Rating Category shall be, with
respect to obligations or investments having a term of less than one year, to a
rating of "F-1+" (or, if Fitch revises its rating schedule from time to time,
such rating as Fitch shall advise the Trustee in writing is comparable to "F-1+"
under such revised rating schedule), and with respect to obligations or
investments having a term of one year or longer, to a rating of "AAA" (or, if
Fitch revises its rating schedule from time to time, such rating as Fitch shall
advise the Trustee in writing is comparable to "AAA" under such revised rating
schedule); and (b) references to the third highest applicable Specific Rating
Category shall be, with respect to obligations or investments having a term of
one year or longer, to a rating of "AA" (or, if Fitch revises its rating
schedule from time to time, such rating as Fitch shall advise the Trustee in
writing is comparable to "AA" under such revised rating schedule).
"Stated Maturity," when used with respect to any Note or any
installment of interest thereon, shall mean the date specified in such Note as
the fixed date on which principal of such Note or such installment of interest
is due and payable.
"Student Loan" shall mean a loan to a borrower for post-secondary
education.
"Student Loan Acquisition Certificate" shall mean a certificate signed
by an Authorized Officer of the Corporation and substantially in the form
attached as Exhibit C hereto.
"Student Loan Purchase Agreements" shall mean, collectively, all
Corporation Student Loan Purchase Agreements and Transferor Student Loan
Purchase Agreements.
"Subaccount" shall mean any subaccount of an Account created or
established by a Supplemental Indenture.
"Subordinate Beneficiaries" shall mean (1) the Holders of any
Outstanding Class B Notes, and (2) any Other Subordinate Beneficiary holding any
Other Subordinate Obligation that is Outstanding.
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"Subordinate Credit Enhancement Facility" shall mean a Credit
Enhancement Facility designated as a Subordinate Credit Enhancement Facility in
the Supplemental Indenture pursuant to which such Credit Enhancement Facility is
furnished by the Corporation.
"Subordinate Credit Facility Provider" shall mean any Person who
provides a Subordinate Credit Enhancement Facility or a Subordinate Demand
Purchase Agreement.
"Subordinate Demand Purchase Agreement" shall mean a Demand Purchase
Agreement designated as a Subordinate Demand Purchase Agreement in the
Supplemental Indenture pursuant to which such Demand Purchase Agreement is
furnished by the Corporation.
"Subordinate Obligations" shall mean, collectively, the Class B Notes
and any Other Subordinate Obligations.
"Subordinate Percentage" shall mean, as of the date of determination,
the percentage resulting by dividing the Aggregate Value by the sum of (i) the
aggregate Principal Amount of Outstanding Class A Notes and Class B Notes plus
accrued interest thereon, (ii) accrued Corporation Swap Payments and (iii) other
payments accrued and owing by the Corporation on Other Obligations.
"Subordinate Swap Agreement" shall mean a Swap Agreement designated as
a Subordinate Swap Agreement in the Supplemental Indenture pursuant to which
such Swap Agreement is furnished by the Corporation.
"Subordinate Swap Counterparty" shall mean any Person who provides a
Subordinate Swap Agreement.
"Supplemental Indenture" shall mean any amendment of or supplement to
this Indenture made in accordance with Article Eight hereof.
"Surplus Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Surplus Fund" shall mean the Fund by that name created and established
by Section 4.1 hereof.
"Swap Agreement" shall mean an interest rate exchange agreement between
the Corporation and a Swap Counterparty, as originally executed and as amended
or supplemented, or other interest rate hedge agreement between the Corporation
and a Swap Counterparty, as originally executed and as amended or supplemented,
in each case approved by each Rating Agency, for the purpose of converting, in
whole or in part, (i) the Corporation's fixed interest rate liability on all or
a portion of any Notes to a variable rate liability, (ii) the Corporation's
variable rate liability on all or a portion of the Notes to a fixed rate
liability or (iii) the Corporation's variable rate liability on all or a portion
of the Notes to a different variable rate liability.
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"Swap Counterparty" shall mean any Person with whom the Corporation
shall, from time to time, enter into a Swap Agreement.
"Swap Counterparty Guarantee" shall mean a guarantee in favor of the
Corporation given in connection with the execution and delivery of a Swap
Agreement under this Indenture.
"Term Notes" shall mean Notes the payment of the principal of which is
provided for from moneys credited to the Principal Account pursuant to
subsection (A) or (B) of Section 4.7.2 hereof.
"Transfer Agreement" shall mean any agreement among the Corporation,
the Trustee and the Transferor providing for the sale by the Transferor to the
Corporation of Student Loans Financed or to be Financed under this Indenture
(which Student Loans have previously been originated on behalf of the Transferor
or purchased from one or more Lenders or SLFC pursuant to one or more Student
Loan Purchase Agreements), together with all of the Transferor's right, title
and interest in and to the related Student Loan Purchase Agreements as they
relate to such Student Loans.
"Transferor" shall mean GOAL Funding, and any other organization with
which the Corporation and the Trustee have entered into a Transfer Agreement,
subject to confirmation of ratings on any then Outstanding Unenhanced Notes, as
evidenced by written confirmation to the Trustee to that effect from each Rating
Agency, or, if no Unenhanced Notes are then Outstanding but Other Obligations
are Outstanding, consent of each Other Beneficiary holding such Outstanding
Other Obligations, as evidenced in writing to the Trustee by each such Other
Beneficiary.
"Transferor Student Loan Purchase Agreements" shall mean, with respect
to Financed Student Loans transferred pursuant to a Transfer Agreement, all
agreements between the Transferor and a Lender (in the case of FFELP Loans) or
SLFC (in the case of Alternative Loans) providing for the sale of such Financed
Student Loans by such Lender or SLFC to the Transferor or its agent and
substantially in the forms which are on file with the Trustee, including
amendments thereto made in accordance with Section 5.18 hereof.
"Trust Estate" shall mean the Trust Estate as described in the Granting
Clauses hereof.
"Trust Funds" shall mean, in the aggregate, all of the Funds and
Accounts.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" shall mean U.S. Bank National Association, as trustee under
this Indenture, and its successor or successors and any other corporation which
may at any time be substituted in its place pursuant to this Indenture.
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"Unenhanced Note" shall mean, with respect to a Class A Note or a Class
B Note, any Note the payment of the principal of and interest on which is not
secured by a Credit Enhancement Facility or a Demand Purchase Agreement.
"Value" shall mean, on any calculation date when required under this
Indenture, the value of the Trust Estate calculated by the Corporation, in
accordance with the following:
(1) with respect to any Eligible Loan, the Principal Balance
thereof, plus any unamortized premiums, accrued interest and Special
Allowance Payments thereon; provided that any Liquidated Alternative
Loan shall be deemed to have a value of zero;
(2) with respect to any funds of the Corporation on deposit in
any commercial bank or as to any banker's acceptance or repurchase
agreement or investment agreement, the amount thereof plus accrued
interest thereon;
(3) with respect to any Investment Securities of an investment
company, the bid price of the shares as reported by the investment
company;
(4) as to other investments, (i) the bid price published by a
nationally recognized pricing service, or (ii) if the bid and asked
prices thereof are published on a regular basis in The Wall Street
Journal (or, if not there, then in The New York Times): the average of
the bid and asked prices for such investments so published on or most
recently prior to such time of determination plus accrued interest
thereon;
(5) as to investments the bid prices of which are not
published by a nationally recognized pricing service and the bid and
asked prices of which are not published on a regular basis in The Wall
Street Journal or The New York Times the lower of the bid prices at
such time of determination for such investments by any two nationally
recognized government securities dealers (selected by the Corporation
in its absolute discretion) at the time making a market in such
investments, plus accrued interest thereon;
(6) any accrued but unpaid Swap Counterparty Payment, unless
the Swap Counterparty is in default of its obligations under the Swap
Agreement; and
(7) with respect to any Student Loan that does not constitute
an Eligible Loan, unless otherwise specifically provided herein, the
lesser of (i) the market value thereof, as determined by a nationally
recognized evaluator acceptable to the Trustee, and (ii) the Principal
Balance thereof, plus any unamortized premiums and accrued interest
thereon; provided that any Liquidated Alternative Loan shall be deemed
to have a value of zero.
"Value of Investment Securities" shall mean (i) as to demand bank
deposits, bank time deposits which may be withdrawn without penalty by the
depositor upon fourteen (14) days' or less notice and Investment Securities
which mature not more than six (6) months from the date of computation, the
amount of such deposits and the par value of such Investment Securities, and
(ii) as to Investment Securities, other than demand bank deposits and bank time
deposits
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described in clause (i), which mature more than six (6) months after the date of
computation, the par value thereof or, if purchased at more or less than par,
the cost thereof adjusted to reflect the amortization or premium or discount, as
the case may be, paid upon their purchase. The computation made under this
paragraph shall include accrued interest.
"Variable Rate Notes" shall mean Notes whose interest rate is not fixed
but varies on a periodic basis as specified in the Supplemental Indenture
providing for the issuance thereof.
Section 1.2. Definitions of General Terms. Unless the context shall
clearly indicate otherwise, or may otherwise require, in this Indenture the
terms "herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms
refer to this Indenture as a whole and not to any particular article, section or
subdivision hereof.
Unless the context shall clearly indicate otherwise, or may otherwise
require, in this Indenture: (i) references to articles, sections and other
subdivisions, whether by number or letter or otherwise, are to the respective or
corresponding articles, sections or subdivisions of this Indenture as such
articles, sections or subdivisions may be amended from time to time; (ii)
references to articles, chapters, subchapters and sections of any public law or
statute of the United States or any section thereof, are to the respective or
corresponding articles, chapters, subchapters, sections and statutes as they may
be amended from time to time; (iii) the word "heretofore" means before the date
of execution of this Indenture, the word "now" means at the date of execution of
this Indenture, and the word "hereafter" means after the date of execution of
this Indenture.
Section 1.3. Computations. Unless the facts shall then be otherwise,
all computations required for the purposes of this Indenture shall be made on
the assumption that: (i) the principal of and interest on all Notes shall be
paid as and when the same become due; (ii) all credits required by this
Indenture to be made to any Fund or Account shall be made in the amounts and at
the times required; (iii) all Notes required by this Indenture to be redeemed
from moneys credited to the Note Principal Account shall be redeemed on the
respective Sinking Fund Payment Dates therefor in the amounts and at the times
as required by this Indenture; and (iv) all Corporation Swap Payments and
Counterparty Swap Payments (unless the Swap Counterparty is then in default of
its obligations under the Swap Agreement) shall be paid when the same become
due.
Section 1.4. Compliance Certificates and Opinions, etc.
(a) Except as otherwise specifically provided in this Indenture, upon
any application or request by the Corporation to the Trustee to take any action
under any provision of this Indenture, the Corporation shall furnish to the
Trustee (i) a Corporation Certificate 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
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which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any property or securities
with the Trustee that is to be made the basis for the release of any
property subject to the lien created by this Indenture, the Corporation
shall, in addition to any obligation imposed in Section 1.4(a) or
elsewhere in this Indenture, furnish to the Trustee (1) a Corporation
Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such deposit)
to the Corporation of the property or securities to be so deposited,
(2) 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 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 first priority lien and security interest in favor of the Trustee,
for the benefit of the Trustee, created by this Indenture in the
property or securities to be so deposited, 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,
and (3) evidence that the Rating Agency Condition has been satisfied.
(ii) Whenever the Corporation is required to furnish to the
Trustee a Corporation Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the
Corporation shall also deliver to the Trustee an Independent
Certificate as to the same matters, if the fair value to the
Corporation of the property to be so deposited and of all other such
property made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Corporation, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Principal Amount of
the Notes, but such a certificate need not be furnished with respect to
any property so deposited, if the fair
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value thereof to the Corporation as set forth in the related
Corporation Certificate is less than $25,000 or less than 1% of the
Outstanding Principal Amount of the Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 1.4(b)(v), whenever any property or
securities are to be released from the lien created by this Indenture,
the Corporation shall also furnish to the Trustee a Corporation
Certificate 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 created by this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Corporation is required to furnish to the
Trustee a Corporation Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above,
the Corporation shall also furnish to the Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property or securities (other than property
described in clauses (A) or (B) of Section 1.4(b)(v)) released from the
lien created by this Indenture since the commencement of the then
current fiscal year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Principal 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 Corporation
Certificate is less than $25,000 or less than one percent of the then
Outstanding Principal Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Corporation may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of Student
Loans as and to the extent permitted or required by this Indenture and
the Servicing Agreement, and (B) make cash payments out of the Funds
and Accounts as and to the extent permitted or required by this
Indenture.
(c) 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 Corporation
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, Counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer or the Corporation, stating that the information with respect to
such factual matters is in the possession of the Servicer or the
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Corporation, 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 Trustee, it is provided that the Corporation shall
deliver any document as a condition of the granting of such application, or as
evidence of the Corporation'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 Corporation to have such application granted or to
the sufficiency of such certificate or report. The foregoing shall not, however,
be construed to affect the Trustee's right to rely upon the truth and accuracy
of any statement or opinion contained in any such document as provided in
Article VII.
Section 1.5. Evidence of Action by the Corporation. Except as otherwise
specifically provided in this Indenture, any request, direction, command, order,
notice, certificate or other instrument of, by or from the Corporation shall be
effective and binding upon the Corporation for the purposes of this Indenture if
signed by an Authorized Officer.
Section 1.6. Exclusion of Notes Held By or For the Corporation. In
determining whether the Holders of the requisite Principal Amount of Notes
Outstanding have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Notes owned by the Corporation shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes which the
Trustee knows to be so owned shall be disregarded.
Section 1.7. Exhibits. Attached to and by reference made a part of this
Indenture are the following Exhibits:
Exhibit A: Form of Eligible FFELP Loan Acquisition Certificate;
Exhibit B: Form of Eligible FFELP Loan Origination Certificate;
Exhibit C: Form of Student Loan Acquisition Certificate;
Exhibit D: Form of Updating Eligible FFELP Loan Acquisition
Certificate; and
Exhibit E: Form of Eligible Alternative Loan Acquisition Certificate.
Section 1.8. 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
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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 and any Other Obligations.
"indenture security holder" means a Noteholder or Other Beneficiary.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Corporation 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.
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ARTICLE TWO
NOTE FORMS
Section 2.1. Forms Generally. The Notes and the Trustee's certificate
of authentication shall be in substantially the forms set forth in this Article
Two, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture or by the Supplemental
Indenture providing for the issuance thereof, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their signing 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.
Section 2.2. Form of Notes. The Notes shall be in substantially the
following form:
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTE
[SENIOR] [SUBORDINATE] [JUNIOR SUBORDINATE] SERIES __
CLASS _____
No. R ____________ $
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
REGISTERED HOLDER:
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a corporation
organized under the laws of the State of Delaware (the "Corporation," which term
includes any successor corporation under the Indenture hereinafter referred to),
acknowledges itself indebted and hereby promises to pay to the registered holder
specified above, or registered assigns (the "Registered Holder"), but solely
from the revenues and receipts hereinafter specified and not otherwise, the
Principal Amount specified above on the Stated Maturity Date specified above
(subject to the right of prior redemption hereinafter mentioned), upon
presentation and surrender of this Note at the Principal Office (as defined in
the Indenture) of the Trustee
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<PAGE>
hereinafter referred to or, at the option of the Registered Holder hereof, at
the Principal Office of any duly appointed Paying Agent, and to pay, from the
source and in the manner hereinafter provided, interest on said principal sum to
the Registered Holder hereof from the date hereof until the payment of said
principal sum in full, at the rate per annum specified above, payable
semiannually on the first day of June and December in each year, commencing
______________________, ________, by check or draft mailed to the Person who is
the Registered Holder hereof as of 5:00 p.m. in the city in which the Principal
Office of the Note Registrar is located on the fifteenth day of the calendar
month, whether or not a Business Day (as defined in the Indenture), preceding
such interest payment date (the "Record Date"), at the address of such
Registered Holder as it appears on the Note Register maintained by the Note
Registrar[; provided that, if the Registered Holder of this Note is the
Registered Holder of Notes of this series in the aggregate Principal Amount of
$1,000,000 or more (or, if less than $1,000,000 in Principal Amount of Notes of
such series is outstanding, the Registered Holder of all outstanding Notes), at
the direction of such Registered Holder such principal and interest shall be
payable by electronic transfer by the Trustee in immediately available funds to
an account designated by such Registered Holder]. In addition, interest on this
Note is payable at the maturity hereof in the same manner as the principal
hereof, unless the date of such maturity is a regularly scheduled interest
payment date, in which event interest is payable in the manner set forth in the
preceding sentence. Any interest not so timely paid or duly provided for shall
cease to be payable to the Person who is the Registered Holder hereof at the
close of business on the Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of, premium, if any,
and interest on this Note are payable in lawful money of the United States of
America.
This Note is one of an authorized issue of Notes (hereinafter called
the "Notes"), issued and to be issued by the Corporation in one or more series
pursuant to an Indenture of Trust, dated as of December 1, 1999, as [amended
and] supplemented by a ________________ Supplemental Indenture of Trust, dated
as of ______________, (collectively, the "Indenture"), each between the
Corporation and U.S. Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
(the "Series ____ Notes") limited to an aggregate Principal Amount of
$____________, the proceeds of which will be used by the Corporation to
___________________.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
(as defined in the Indenture) secured thereunder; the student loan acquisition
program being financed by the issuance of the Notes; the revenues and other
moneys pledged to
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the payment of the principal of, premium, if any, and interest on the Notes and
the Other Obligations; the nature and extent and manner of enforcement of the
pledge; the conditions upon which Notes may be issued or Other Obligations may
be incurred by the Corporation thereunder, payable from such revenues and other
moneys thereunder as Senior Obligations, Subordinate Obligations or Class C
Notes (each as defined in the Indenture); the conditions upon which the
Indenture may be amended or supplemented with or without the consent of the
Holders of the Notes; the rights and remedies of the Registered Holder hereof
with respect hereto and thereto, including the limitations upon the right of a
Registered Holder hereof to institute any suit, action or proceeding in equity
or at law with respect hereto and thereto; the rights, duties and obligations of
the Corporation and the Trustee thereunder; the terms and provisions upon which
the liens, pledges, charges, trusts and covenants made therein may be discharged
at or prior to the maturity or redemption of this Note, and this Note thereafter
no longer be secured by the Indenture, or be deemed to be Outstanding (as
defined in the Indenture) thereunder; and for the other terms and provisions
thereof.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation 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 Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
[The Series ________ Notes constitute Class B Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of Class A Notes issued from time to time under the Indenture and Other
Senior Beneficiaries thereunder. A failure to pay principal of, premium, if any,
or interest on this Class B Note will not constitute an Event of Default under
the Indenture if any Senior Obligation is Outstanding (each as defined in the
Indenture).]
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[The Series ________ Notes constitute Class C Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of Class A Notes and Class B Notes issued from time to time under the
Indenture and Other Senior Beneficiaries and Other Subordinate Beneficiaries (as
defined in the Indenture) thereunder. A failure to pay principal of, premium, if
any, or interest on this Class C Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding or any Subordinate
Obligation (as defined in the Indenture) is Outstanding.]
[At this point in the Note form of any series should be inserted the
paragraphs, if any, relating to the terms of redemption for that series.]
Notice of redemption shall be given by first-class mail mailed at least
30 days before the Redemption Date to each Registered Holder of Notes to be
redeemed at his last address appearing on the Note Register; but no defect in or
failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Notes so called for redemption will cease to bear interest on such
Redemption Date, provided funds for their redemption have been duly deposited,
and, except for the purpose of payment, shall no longer be protected by the
Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Notes of a denomination larger
than $[5,000] may be redeemed in part ($[5,000] or an integral multiple thereof)
and that upon any partial redemption of any such Note the same shall be
surrendered in exchange for one or more new Notes of the same series in
authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other Subordinate Beneficiaries, on behalf of the Holders of
all the Notes, to
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waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until the Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or the Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series and Stated Maturity upon surrender hereof at the
Principal Office of the Note Registrar or the Principal Office of an
Authenticating Agent. Thereupon the Corporation shall execute and the Trustee or
the Authenticating Agent, as the case may be, shall authenticate and deliver, in
exchange for this Note, one or more new fully registered Notes in the name of
the transferee, of an authorized denomination, in aggregate Principal Amount
equal to the Principal Amount of this Note, of the same series and Stated
Maturity and bearing interest at the same rate.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of
Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be executed
in its name by the facsimile signatures of its President and Secretary.
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EDUCATION LOANS INCORPORATED
--------------------------
President
--------------------------
Secretary
Dated:
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
U.S. BANK NATIONAL
ASSOCIATION, as Trustee [or _____________, _____________, as
Authenticating Agent
By_________________________ By____________________________
Authorized Representative Authorized Representative]
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--------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ___________________________
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of the
____________________________ within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
_____________________________________
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ARTICLE THREE
THE NOTES
Section 3.1. General Title. There is hereby created and established an
issue of Notes of the Corporation to be known and designated as "Student Loan
Asset-Backed Notes," which Notes may be issued in series as hereinafter
provided. With respect to the Notes of any particular series, the Corporation
may incorporate in or add to the general title of such Notes any words, letters
or figures designed to distinguish that series.
Section 3.2. General Limitations; Issuable in Series; Purposes and
Conditions for Issuance; Payment of Principal and Interest. The aggregate
Principal Amount of Notes that may be authenticated and delivered and
Outstanding under this Indenture is not limited, except as may be limited by
law. The Notes may be issued in series as from time to time authorized by the
Board.
Notes shall be issued only for the purposes of (a) providing funds for
the origination or purchase, or both, by the Corporation of Eligible Loans
(including, for this purpose, the acquisition under this Indenture of Eligible
Loans previously purchased or originated by the Corporation from other available
moneys of the Corporation), or (b) refunding at or before their Stated Maturity
any or all Outstanding Notes issued for that purpose, and (c) paying
Administrative Costs, Note Fees, Costs of Issuance and capitalized interest on
the Notes being issued and making deposits to the Reserve Fund.
The Notes, including the principal thereof, premium, if any, and
interest thereon and any Carry-Over Amounts (and accrued interest thereon) with
respect thereto, and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under this Indenture.
The Stated Maturities and Sinking Fund Payment Dates of all Notes shall
occur on a June 1 or an December 1 (unless otherwise specified with respect to
any Variable Rate Notes, including those Initial Notes constituting Variable
Rate Notes, in the Supplemental Indenture providing for the issuance thereof).
All Corporation Swap Payments and other payments to be made by the Corporation
to Credit Facility Providers shall be payable on a regularly scheduled Interest
Payment Date. Except as otherwise provided in a Supplemental Indenture with
respect to the series of Notes authorized thereby, interest on each Note shall
be calculated to accrue on the basis of a 360-day year composed of twelve 30-day
months. In the event a default occurs in the due and punctual payment of any
interest on any Note, interest shall be payable thereon to the extent permitted
by law on the overdue installment of interest, at the interest rate borne by the
Note in respect of which such interest is overdue.
The principal of and premium, if any, on the Notes, together with
interest payable on the Notes at the Maturity thereof if the date of such
Maturity is other than a regularly scheduled Interest Payment Date, shall,
except as hereinafter provided or as otherwise provided in a Supplemental
Indenture, be payable upon presentation and surrender of such Notes at the
Principal Office of the Trustee or, at the option of the Holder, at the
Principal Office of a duly
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appointed Paying Agent. Interest due on the Notes on each regularly scheduled
Interest Payment Date shall, except as hereinafter provided or as otherwise
provided in a Supplemental Indenture, be payable by check or draft drawn upon
the Trustee mailed to the Person who is the Holder thereof as of 5:00 p.m. in
the city in which the Principal Office of the Note Registrar is located on the
Regular Record Date relating thereto, at the address of such Holder as it
appears on the Note Register. Any interest not so timely paid or duly provided
for (herein referred to as "Defaulted Interest") shall cease to be payable to
the Person who is the Holder thereof at the close of business on the Regular
Record Date and shall be payable to the Person who is the Holder thereof at the
close of business on a Special Record Date for the payment of any such defaulted
interest. Such Special Record Date shall be fixed by the Trustee whenever moneys
become available for payment of the Defaulted Interest, and notice of the
Special Record Date shall be given to the Holders of the Notes not less than ten
(10) days prior thereto by first-class mail to each such Holder as shown on the
Note Register on a date selected by the Trustee, stating the date of the Special
Record Date and the date fixed for the payment of such Defaulted Interest. All
payments of principal of, premium, if any, and interest on the Notes shall be
made in lawful money of the United States of America.
After the issuance of the Initial Notes, and from time to time, one or
more additional series of Notes may be issued upon compliance with the
provisions of Article Three hereof (except where specifically indicated
otherwise in this Section 3.2) in such Principal Amounts as may be determined by
the Corporation for any of the purposes hereinbefore specified in this Section
3.2 upon compliance with the following conditions and any additional conditions
specified in a Supplemental Indenture:
A. The Trustee shall have certified that there is no
deficiency in the Indemnification Fund or the Note Fund and that, after
the issuance of the series of Notes then to be issued, there will not
be a deficiency in the Reserve Fund.
B. An Authorized Officer of the Corporation shall have
certified (as evidenced by a Corporation Certificate filed with the
Trustee) that the Corporation is not in default in the performance of
any of its covenants and agreements in this Indenture made (unless, in
the opinion of Counsel, any such default does not deprive any
Beneficiary in any material respect of the security afforded by this
Indenture).
C. The Trustee shall have been provided with a Cash Flow
Projection giving effect to such issuance of Notes which shall reflect
that, after such issuance, the Senior Asset Requirement will be met;
provided that no such Cash Flow Projection shall be required if
Unenhanced Notes are then Outstanding and each Rating Agency confirms
in writing to the Trustee that it will not require such Cash Flow
Projection.
D. If such Notes are to be Class A Notes or Class B Notes, the
Trustee shall have been provided with written evidence from each Rating
Agency that such series of Notes is rated (i) if such Notes are to be
Class A Notes, at least as high as the outstanding rating assigned by
each Rating Agency to any Outstanding Class A Notes, and (ii) if such
Notes are to be Class B Notes, at least as high as the outstanding
rating assigned by each Rating Agency to any Outstanding Class B Notes.
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E. If any Unenhanced Notes are Outstanding, each Rating Agency
shall have confirmed that no outstanding ratings on any of the
Outstanding Unenhanced Notes will be reduced or withdrawn as a result
of such issuance, as evidenced by written confirmations thereof
delivered to the Trustee from each Rating Agency, or, if no Unenhanced
Notes are then Outstanding, but Other Obligations are Outstanding, the
Other Beneficiaries holding such Other Obligations consent to the
issuance of such Notes, as evidenced in writing to the Trustee by each
such Other Beneficiary.
In calculating the Reserve Fund Requirement, all Notes to be defeased
by a series of refunding Notes shall be deemed not Outstanding as of the date of
calculation.
Section 3.3. Terms of Particular Series. Each series of Notes shall be
created by and issued pursuant to a Supplemental Indenture and such Supplemental
Indenture shall designate Notes of each series as Class A Notes, Class B Notes
or Class C Notes. The Notes of each series shall bear such date or dates, shall
be payable at such place or places, shall have such Stated Maturities and
Sinking Fund Payment Dates on June 1 or December 1 (unless otherwise specified
with respect to any Variable Rate Notes, including those Initial Notes
constituting Variable Rate Notes, in the Supplemental Indenture providing for
the issuance thereof), shall bear interest at such rate or rates, from such date
or dates, payable in such installments and on Interest Payment Dates and at such
place or places, may be redeemable at such Redemption Price or Prices and upon
such terms (in addition to the prices and terms herein specified for redemption
of all Notes) and may be prepayable upon such terms as shall be provided for in
the Supplemental Indenture creating that series. The Supplemental Indenture
creating any series of Notes may contain a provision limiting the aggregate
Principal Amount of the Notes of that series or the aggregate Principal Amount
of Notes which may thereafter be issued.
All Notes of the same series shall be substantially identical in tenor
and effect, except as to denomination, the differences specified herein or in a
Supplemental Indenture between interest rates, Stated Maturities and redemption
provisions.
Section 3.4. Form and Denominations. Except as otherwise set forth in
the Supplemental Indenture providing for the issuance thereof, the Notes of each
series shall be issued in substantially the form set forth in Article Two
hereof. The Notes of each series shall be distinguished from the Notes of other
series and Term Notes shall be distinguished from Serial Notes in such manner as
the Board may determine.
The Notes of any series may be issuable as fully registered Notes only,
of single Stated Maturities.
The Notes of each series shall be issuable in such denominations as
shall be provided in the provisions of the Supplemental Indenture creating such
series. In the absence of any such provisions with respect to the Notes of any
particular series, the Notes of such series shall be in the denomination of
$5,000 in original Principal Amount or any integral multiple thereof.
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Section 3.5. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Corporation by the president or any vice president of
the Corporation and attested by the secretary or an assistant secretary of the
Corporation, either or both of which signatures may be facsimiles.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Corporation may deliver Notes executed by the Corporation to
the Trustee or the Authenticating Agent for authentication; and, upon
Corporation Order, the Trustee or the Authenticating Agent, as the case may be,
shall authenticate and deliver such Notes as in this Indenture provided and not
otherwise.
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 in Article
Two hereof executed by the Trustee or the Authenticating Agent by manual
signature of one of its authorized officers, 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 3.6. Temporary Notes. Pending the preparation of definitive
Notes, the Corporation may execute and, upon Corporation Order, the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued, in fully registered form, without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers of the
Corporation executing such Notes may determine, as evidenced by their signing of
such Notes.
If temporary Notes are issued, the Corporation 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 Principal Office of the Trustee,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Corporation shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like Principal Amount of
definitive Notes of the same series and Stated Maturity 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 3.7. Registration, Transfer and Exchange. The Corporation shall
cause to be kept at the Principal Office of the Note Registrar a Note Register
in which, subject to such reasonable regulations as it may prescribe, the
Corporation shall provide for the registration of Notes and of transfers of
Notes as herein provided. The Corporation may, in a Supplemental Indenture,
appoint an Authenticating Agent for the purpose of receiving, authenticating and
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delivering Notes in connection with transfers, exchanges and registrations as
herein provided. Unless an Authenticating Agent is designated to serve in such
capacity pursuant to a Supplemental Indenture or is otherwise directed, and
agrees, to so serve in accordance with a Corporation Order, the Trustee shall be
Note Registrar for the purpose of registering Notes and transfer of Notes as
herein provided. At reasonable times and under reasonable regulations
established by the Note Registrar, the Note Register may be inspected and copied
by the Corporation or by the Holders (or a designated representative thereof) of
ten percent (10%) or more in Principal Amount of Notes then Outstanding.
The Trustee and any Authenticating Agent shall adhere, with respect to
transfer of Notes, to the standards for efficiency in transfer agent performance
established in Securities and Exchange Commission Rules 17Ad-2 through 17Ad-7
under the Securities Exchange Act of 1934, most particularly Rule 17Ad-2, which
requires that registered transfer agents process at least ninety percent (90%)
of routine items (such as certificates presented for transfer) received during
any month within three (3) business days of their receipt.
Upon surrender for transfer or exchange of any Note at the Principal
Office of the Note Registrar or at the Principal Office of any Authenticating
Agent, or on a Purchase Date or Mandatory Tender Date with respect to Notes
which are Deemed Tendered, whether or not surrendered on such date, the
Corporation shall execute, and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in the name of the designated
transferee or transferees, including transferees designated by a Depositary with
respect to Notes Deemed Tendered, or in exchange for the Note surrendered, one
or more new fully registered Notes of any authorized denomination or
denominations, of like aggregate Principal Amount, of the same series, having
the same Stated Maturity and interest rate and bearing numbers not previously
assigned.
All Notes executed, delivered and authenticated pursuant to the
preceding paragraph shall be registered in the name of the Holder presenting the
Note for exchange or the designated transferee, as the case may be, on the Note
Register on the date of such transfer or exchange.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee upon receipt thereof
from the Note Registrar or the Authenticating Agent, as the case may be, and
thereafter disposed of as directed by Corporation Order.
All Notes issued upon any transfer or exchange of Notes, including
Notes issued in lieu of Notes Deemed Tendered, whether or not surrendered, shall
be the valid obligations of the Corporation evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the Notes
surrendered upon such transfer or exchange or in lieu of which such Notes were
issued.
Every Note presented or surrendered for transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Note Registrar or the Authenticating Agent, as the case may
be, duly executed, by the Holder thereof
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or his attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar
or the Authenticating Agent, as the case may be, which requirements include
membership or participation in a "signature guarantee program" determined by the
Note Registrar or the Authenticating Agent, as the case may be, in accordance
with the Exchange Act, and such other documents as the Trustee may require.
The Corporation may require payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Notes, other than exchanges upon a
partial redemption of a Note not involving any transfer. All other expenses
incurred by the Corporation, the Trustee, the Note Registrar or the
Authenticating Agent in connection with any transfer or exchange of Notes shall
be paid by the Corporation.
Except in connection with a Purchase Demand, the Corporation shall not
be required to transfer any Note (i) during a period beginning at the opening of
business fifteen (15) days before any selection of Notes of the same series for
redemption and ending at the close of business on the day of such selection,
(ii) selected for redemption in whole or in part, (iii) after receipt by the
Depositary of a properly completed Purchase Demand with respect thereto, or (iv)
on or after the date notice of a Mandatory Tender Date is given through such
Mandatory Tender Date. In the event that a Note is transferred in connection
with a Purchase Demand either during the period referred to in clause (i) or
after being selected for redemption in whole or in part, the Note Registrar or
the Authenticating Agent, as appropriate, shall give written notice to any
transferee thereof that such Note may be, or has been, selected for redemption,
as the case may be.
Section 3.8. Mutilated, Destroyed, Lost and Stolen Notes. If a
mutilated Note is surrendered to the Trustee or the Note Registrar, the
Corporation shall execute and the Trustee or any Authenticating Agent shall
authenticate and deliver in exchange therefor a new Note of the same series and
of like tenor and Principal Amount, Stated Maturity and interest rate, bearing a
number not contemporaneously outstanding. If the Corporation, the Note
Registrar, any Authenticating Agent and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Note, and there is
delivered to the Corporation, the Note Registrar, any Authenticating Agent and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Corporation, the Note
Registrar, any Authenticating Agent or the Trustee that such Note has been
acquired by a bona fide purchaser, the Corporation shall execute and upon its
request the Trustee or any Authenticating Agent shall authenticate and deliver,
in exchange for or in lieu of such destroyed, lost or stolen Note, a new Note of
the same series and of like tenor, Principal Amount, Stated Maturity and
interest rate.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Note, pay such Note.
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Every new Note issued pursuant to this Section 3.8 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Corporation, whether or not the 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 such series duly issued and authenticated hereunder. Neither the
Corporation, the Trustee, the Note Registrar nor any Authenticating Agent shall
be required to treat both the original Note and any duplicate Note as being
Outstanding for the purpose of determining the Principal Amount of Notes which
may be issued hereunder or for the purpose of determining any percentage of
Notes Outstanding hereunder, but both the original and duplicate Note shall be
treated as one and the same.
Upon the issuance of any new Note under this Section 3.8, the
Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Note Registrar, any
Authenticating Agent and the Trustee) connected therewith.
The provisions of this Section 3.8 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 3.9. Interest Rights Preserved; Dating of Notes. Each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry all the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note. Each Note shall bear an original
issue date as provided in the Supplemental Indenture authorizing the issuance of
the series of Notes of which such Note is a part and, upon the original delivery
of a series of Notes or an exchange or transfer of Notes pursuant to Section 3.7
hereof, the Trustee or the Authenticating Agent, as the case may be, shall date
each Note to be delivered as of the date of authentication thereof, except as
may be otherwise provided in a Supplemental Indenture with respect to Notes of
the series authorized to be issued thereby.
Section 3.10. Persons Deemed Holders. The Corporation, the Trustee,
each Authenticating Agent, each Paying Agent, each Note Registrar, each
Depositary and any other agent of the Corporation may, except in the case of
Notes Deemed Tendered, treat the Person in whose name any Registered Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of (and premium, if any), interest on and any Carry-Over Amounts (and
accrued interest thereon) with respect to such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Corporation,
the Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar, any
Depositary nor any other agent of the Corporation shall be affected by notice to
the contrary.
Section 3.11. Cancellation. All Notes surrendered for payment,
redemption, transfer or exchange, if surrendered to the Trustee, shall be
promptly canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already canceled, shall
be promptly canceled by it. The Corporation may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder, which
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Notes so delivered shall be promptly canceled by the Trustee. All canceled Notes
held by the Trustee shall be disposed of as directed by a Corporation Order.
Section 3.12. Class B and Class C Notes. The Corporation may at any
time issue a series of Notes pursuant to Section 3.2 hereof which is subordinate
in rights to the Senior Obligations. Such subordinate obligations shall either
be on a parity with the Subordinate Obligations in all respects or may be
subordinate to the Subordinate Obligations in respect of each of the provisions
of this Indenture which express the subordination of the Subordinate
Obligations.
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ARTICLE FOUR
CREATION OF FUNDS AND ACCOUNTS;
CREDITS THERETO AND PAYMENTS THEREFROM
Section 4.1. Creation of Funds and Accounts. There are hereby created
and established the following Funds and Accounts to be held by the Trustee, or,
in the case of the Acquisition Fund, the Revenue Fund or the Administration
Fund, by the Trustee or a Deposit Agent, and maintained in accordance with the
provisions of this Indenture:
1. An Acquisition Fund.
2. An Administration Fund.
3. A Reserve Fund.
4. An Indemnification Fund.
5. A Revenue Fund, within which there shall be a Repayment
Account and an Income Account.
6. A Note Fund, within which there shall be an Interest
Account, a Principal Account and a Retirement Account.
7. An Alternative Loan Guarantee Fund.
8. A Surplus Fund, within which there shall be a Special
Redemption and Prepayment Account and a Surplus Account.
Section 4.2. Acquisition Fund. With respect to each series of Notes,
the Trustee shall, upon delivery to the initial purchasers thereof and from the
proceeds thereof, credit to the Acquisition Fund the amount, if any, specified
in the Supplemental Indenture providing for the issuance of such series of
Notes. The Trustee shall also deposit in the Acquisition Fund: (i) any funds to
be transferred thereto from the Revenue Fund as provided in Section 4.6 hereof
or from the Surplus Fund as provided in Section 4.8 hereof, and (ii) any other
amounts specified in a Supplemental Indenture to be deposited therein. In
addition, the Trustee shall also credit to the Acquisition Fund any Eligible
Loans transferred thereto from the Surplus Account pursuant to Section 4.8
hereof (any such Eligible Loans so transferred being thereafter deemed to have
been Financed with moneys in the Acquisition Fund).
Balances in the Acquisition Fund shall be used only for (a) the
acquisition of Eligible Loans pursuant to a Student Loan Purchase Agreement
(including, for this purpose, the acquisition of Eligible Loans previously
purchased or originated by the Corporation or the Trustee on behalf of the
Corporation pursuant to a Student Loan Purchase Agreement from other available
moneys of the Corporation) or Transfer Agreement, (b) the origination of
Eligible Loans, (c) the redemption or purchase of Notes as provided in a
Supplemental Indenture
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providing for the issuance of such Notes, (d) the payment of Debt Service on the
Class A Notes and Other Senior Obligations when due (upon transfer to the Note
Fund as set forth in the following paragraph), (e) the payment of the purchase
price of any Class A Notes required to be purchased on a Purchase Date or a
Mandatory Tender Date (upon transfer to the Note Fund as set forth in the
following paragraph), or (f) to cure deficiencies in the Indemnification Fund
(upon transfer to the Indemnification Fund as set forth in the following
paragraph). The Trustee shall make or shall authorize the Deposit Agent to make
payments to the Transferor, Lenders or SLFC from the Acquisition Fund for the
acquisition of Eligible Loans (such payments to be made at purchase prices not
in excess of the amount specified therefor in the Supplemental Indenture which
created the Account in the Acquisition Fund from which such purchase price is to
be withdrawn), including the payment of reasonable transfer or assignment fees,
if applicable, upon receipt by the Trustee of an Eligible FFELP Loan Acquisition
Certificate, in the case of Eligible FFELP Loans, or an Eligible Alternative
Loan Acquisition Certificate, in the case of Eligible Alternative Loans, and all
documents, opinions, certificates and amounts required thereby (including, in
the case of an Eligible Alternative Loan, (i) the original promissory note
relating thereto and all endorsements thereof required by the related Student
Loan Purchase Agreement, and (ii) the amount, if any, required by the related
Supplemental Indenture to be deposited in the Alternative Loan Guarantee Fund in
connection with such acquisition). Within three (3) Business Days after the
disbursement of moneys from the Acquisition Fund for the purchase of Eligible
FFELP Loans pursuant to an Eligible FFELP Loan Acquisition Certificate, the
Corporation shall forward to the Trustee an updating Corporation Certificate
substantially in the form of Exhibit D hereto with respect to such Eligible
FFELP Loans. The Trustee shall make or shall authorize the Deposit Agent to make
payments from the Acquisition Fund for the origination of Eligible FFELP Loans
upon receipt by the Trustee of an Eligible FFELP Loan Origination Certificate
and all documents, opinions and certificates required thereby. The Trustee shall
make or shall authorize the Deposit Agent to make payments to a Transferor from
the Acquisition Fund for the acquisition of Eligible Loans pursuant to a
Transfer Agreement (such payments to be made at purchase prices not in excess of
the amount specified therefor in the Supplemental Indenture which created the
Account in the Acquisition Fund from which such purchase price is to be
withdrawn), including the payment of reasonable transfer or assignment fees, if
applicable, upon receipt by the Trustee of all documents, opinions, certificates
and amounts required by such Transfer Agreement (including, in the case of an
Eligible Alternative Loan, (i) the original promissory note relating thereto and
all endorsements thereof required by the Transfer Agreement, and (ii) the
amount, if any, required by the related Supplemental Indenture to be deposited
in the Alternative Loan Guarantee Fund in connection with such acquisition).
After any such acquisition, the Corporation and the Trustee shall amend the
Exhibit or Exhibits to the applicable Supplemental Indentures to reflect the
addition of the student loan purchase agreements relating to the Eligible Loans
so acquired and such agreements shall become Student Loan Purchase Agreements
for all purposes under this Indenture.
Balances in the Acquisition Fund (other than any portion of such
Balance consisting of Student Loans) shall be (i) transferred to the credit of
the Indemnification Fund to the extent necessary, after transfers thereto from
the Revenue Fund, the Surplus Fund, the Reserve Fund, the Administration Fund
and the Note Fund, to make any deposit to the credit of the Indemnification Fund
required by Section 4.5 hereof, (ii) after such transfer, if any, to be made
pursuant to the preceding clause (i) has been taken into account, transferred to
the credit of
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the Note Fund on the last Business Day preceding any Interest Payment Date,
Principal Payment Date or Redemption Date to the extent required to pay the Debt
Service due on the Class A Notes and any Other Senior Obligations, all as
provided in Section 4.7 hereof, and (iii) after such transfers, if any, to be
made pursuant to the preceding clauses (i) and (ii) have been taken into
account, transferred to the credit of the Principal Account on any Purchase Date
or Mandatory Tender Date with respect to Class A Notes, to the extent required
by Section 4.7.2(C) hereof. Transfers of amounts from the Acquisition Fund to
the Indemnification Fund and the Note Fund pursuant to the preceding sentence
shall be made by the Trustee without any further authorization or direction. In
the event that, after transfers to the Indemnification Fund from all other Funds
and Accounts, a deficiency exists in the Indemnification Fund under Section 4.5
hereof, the Trustee shall use its best efforts to sell Student Loans included in
the Balance of the Acquisition Fund at the best price available to the extent of
such deficiency; and the proceeds of any such sale shall be credited to the
Indemnification Fund, to the extent of any deficiency in the Indemnification
Fund, and otherwise to the Revenue Fund. If any amounts have been transferred to
either or both of the Indemnification Fund or the Note Fund pursuant to this
paragraph, the Trustee shall, to the extent necessary to cure the deficiency in
the Acquisition Fund as a result of such transfer or transfers, transfer to the
Acquisition Fund amounts from the Revenue Fund in the manner provided in Section
4.6 hereof.
The unpaid principal balance of Financed Student Loans in the
Acquisition Fund shall be included in the Balance of the Acquisition Fund until
such Financed Student Loans shall have been paid in full or sold or exchanged as
herein provided. Interest and principal payments, including Guarantee payments,
and Special Allowance Payments received with respect to Financed Student Loans
(excluding, except as otherwise provided in a Supplemental Indenture, any
federal interest subsidy payments and Special Allowance Payments that accrued
prior to the date on which such Student Loans were Financed) and proceeds from
the sale or other conveyance of Financed Student Loans (except as otherwise
provided in the preceding paragraph) shall be credited, in the case of such
principal and interest, including Guarantee payments and Special Allowance
Payments, to the Revenue Fund as provided in Section 4.6 hereof; in the case of
the portion of the proceeds of such sale or other conveyance which represents
payment of the principal of Financed Student Loans sold, to the Principal
Account; and in the case of the portion of the proceeds of such sale or other
conveyance which represent payment of accrued interest on and Special Allowance
Payments with respect to Financed Student Loans sold, to the Interest Account.
The Corporation may direct the Trustee to sell to any purchaser one or
more Student Loans Financed with moneys in the Acquisition Fund in exchange for
one or more Eligible Loans (of approximately the same aggregate Principal
Balance and accrued noncapitalized borrower interest as such Financed Student
Loans) which (1) evidence the additional obligations of Eligible Borrowers whose
Student Loans have been previously Financed hereunder, or (2) are to be
substituted for Financed Student Loans which are not Eligible Loans; provided
that, prior to any such sale and exchange, the Trustee shall have received an
Eligible FFELP Loan Acquisition Certificate, in the case of Eligible FFELP
Loans, or an Eligible Alternative Loan Acquisition Certificate, in the case of
Eligible Alternative Loans and, in the case of Eligible FFELP Loans, an updating
Corporation Certificate substantially in the form of Exhibit D hereto and all
documents, opinions and certifications required thereby with
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respect to all Eligible Loans to be so transferred to this Indenture in
exchange, together with (A) except in the case of Eligible Loans referred to in
the preceding clause (2) or unless the Principal Balance of Eligible Loans sold
or exchanged within the preceding twelve (12)-month period pursuant to this
paragraph will not, together with the Principal Balance of Eligible Loans then
proposed to be sold or exchanged, exceed $1,000,000, a Corporation Certificate
that, based on a Cash Flow Projection (a copy of which shall be provided to each
Rating Agency), such sale and exchange will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and
Outstanding Other Obligations, Carry-Over Amounts (including accrued interest
thereon) with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make the required deposits to the credit of the Indemnification Fund, and
(B) a written instrument satisfactory to the Trustee assigning all right, title,
interest and privilege of the Corporation in, to and under the student loan
purchase agreement pursuant to which each such Eligible Loan to be transferred
to this Indenture was acquired, to the extent such right, title, interest and
privilege relate to such Eligible Loan; and thereafter the Corporation and the
Trustee shall amend the Exhibit or Exhibits to the applicable Supplemental
Indentures to reflect the addition of such student loan purchase agreements and
such agreements shall become Student Loan Purchase Agreements for all purposes
under this Indenture. Any money received by the Corporation in connection with a
sale and exchange of Financed Student Loans pursuant to this paragraph,
including those moneys representing the excess of the aggregate Principal
Balance of and accrued noncapitalized borrower interest on such Financed Student
Loans released from this Indenture over the aggregate Principal Balance of and
accrued noncapitalized borrower interest on the Eligible Loans transferred to
this Indenture in exchange therefor, shall be deposited to the credit of the
Principal Account and the Interest Account in accordance with the preceding
paragraph. Any such Eligible Loans so transferred to this Indenture in exchange
for Student Loans previously Financed from the Acquisition Fund shall, for all
purposes of this Indenture, be deemed to have been Financed with moneys in the
Acquisition Fund and shall be credited to the Acquisition Fund and included in
the Balance thereof.
Pending application of moneys in the Acquisition Fund for one or more
authorized purposes, such moneys shall be invested in Investment Securities, as
provided in Section 4.11 hereof, and any earnings on or income from said
investments shall be deposited in the Revenue Fund as provided in Section 4.6
hereof.
Section 4.3. Administration Fund. With respect to each series of Notes,
the Trustee shall, upon delivery thereof and from the proceeds thereof, credit
to the Administration Fund the amount, if any, specified in the Supplemental
Indenture providing for the issuance of such series of Notes. The Trustee shall
also credit to the Administration Fund all amounts transferred thereto from the
Revenue Fund and the Surplus Account. Except as otherwise provided in this
Section 4.3, amounts in the Administration Fund shall, upon receipt by the
Trustee of Corporation Orders directing the payment to designated payees in
designated amounts for stated services, or, in the case of reimbursement of the
Corporation for its expenses, to the Corporation, and in each case certifying
that such payment is authorized by this Indenture, be used for and applied only
to pay Costs of Issuance, Administrative Expenses and Note Fees or to reimburse
another fund, account or other source of the Corporation for the previous
payment of Costs of Issuance, Administrative Expenses or Note Fees. If the
servicing of Financed Student Loans is to be converted from one Servicer to
another, and there are any costs or fees associated
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with such conversion, such costs or fees shall constitute Administrative
Expenses and, to the extent payable by the Corporation or the Trustee, shall be
paid by the Trustee from amounts in the Administration Fund. If any such fees or
expenses are payable by the replaced Servicer and such Servicer is insolvent or
otherwise incapable of paying, the Trustee shall pay such fees or expenses from
amounts in the Administration Fund, with or without direction from the
Corporation, and shall thereafter seek reimbursement therefor from the replaced
Servicer. Payments from the Administration Fund for such purposes shall be made
by check or wire transfer by the Trustee or a Deposit Agent, but only in
accordance with such Corporation Orders.
Balances in the Administration Fund shall be applied to the following
purposes in the following order of priority: first, to remedy deficiencies in
the Indemnification Fund to the extent and in the manner provided in Section 4.5
hereof; second, to remedy deficiencies in the Interest Account to the extent and
in the manner provided in Section 4.7.1 hereof for the payment of interest on
Class A Notes or Other Senior Obligations payable therefrom; third, to remedy
deficiencies in the Principal Account to the extent and in the manner provided
in subsections (A) and (C) of Section 4.7.2 hereof for the redemption or payment
of principal or the purchase price of Class A Notes or the payment of Other
Senior Obligations payable therefrom; fourth, to remedy deficiencies in the
Retirement Account to the extent and in the manner provided in Section 4.7.3
hereof for the redemption of Class A Notes or the payment of Other Senior
Obligations payable therefrom; fifth, to remedy deficiencies in the Interest
Account to the extent and in the manner provided in Section 4.7.1 hereof for the
payment of interest on Class B Notes or Other Subordinate Obligations payable
therefrom; sixth, to remedy deficiencies in the Principal Account to the extent
and in the manner provided in subsections (A) and (C) of Section 4.7.2 hereof
for the payment of principal or the purchase price of Class B Notes or the
payment of Other Subordinate Obligations payable therefrom; seventh, to remedy
deficiencies in the Retirement Account to the extent and in the manner provided
in Section 4.7.3 hereof for the redemption of Class B Notes or the payment of
Other Subordinate Obligations payable therefrom; and, eighth, to pay Costs of
Issuance, Note Fees and Administrative Expenses.
Amounts in the Administration Fund may, subject to the last sentence of
this paragraph and any limitations specified in a Supplemental Indenture, be
paid out for Costs of Issuance or Note Fees at any time upon receipt of a
Corporation Order and shall be paid in the full amount designated therein;
provided that the aggregate amount of Costs of Issuance paid or reimbursed from
amounts in the Administrative Fund or any other Fund or Account in respect of a
particular series of Notes shall under no circumstances exceed the amount, if
any, specified therefor in the Supplemental Indenture authorizing the issuance
of Notes of such series. Amounts in the Administration Fund may, subject to the
last sentence of this paragraph and any limitations specified in a Supplemental
Indenture, be paid out for Administrative Expenses, or to reimburse the
Corporation for the prior payment of Administrative Expenses, at any time, in
cumulative amounts in any given Fiscal Year not in excess of (A) the amount of
Budgeted Administrative Expenses for that Fiscal Year, unless an Authorized
Officer of the Corporation shall certify in writing to the Trustee that
Administrative Expenses in an increased amount (i) are reasonable and necessary
in light of all circumstances then existing, (ii) will not materially adversely
affect the ability of the Corporation to pay or perform, as the case may be, all
of its obligations under this Indenture, and (iii) can be paid out of amounts
deposited into the Administration Fund pursuant to the provisions of this
Indenture, plus (B) the amount of
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Administrative Expenses for any prior Fiscal Year previously paid by the
Corporation from a source other than the Administration Fund and requested to be
reimbursed to such source, provided that the amount of such Administrative
Expenses, together with all other Administrative Expenses for such prior Fiscal
Year previously paid or reimbursed from the Administration Fund, shall not
exceed the Budgeted Administrative Expenses for such prior Fiscal Year.
The Trustee shall transfer and credit to the Administration Fund moneys
available hereunder for transfer thereto from the sources set forth in the
following paragraph and in such amounts and at such times as an Authorized
Officer of the Corporation shall direct by Corporation Order; provided such
Corporation Order shall certify that the amounts are required and have been or
will be expended within the next ninety (90) days for a purpose for which the
Administration Fund may be used and applied.
Deposits to the credit of the Administration Fund shall be made from
the following sources in the following order of priority: the Income Account to
the extent and in the manner provided in Section 4.6 hereof; and the Surplus
Account to the extent and in the manner provided in Section 4.8 hereof.
Pending transfers from the Administration Fund, the moneys therein
shall be invested in Investment Securities, as provided in Section 4.11 hereof,
and any earnings on or income from such investments shall be deposited in the
Revenue Fund as provided in Section 4.6 hereof.
Section 4.4. Reserve Fund. The Reserve Fund is established only for the
security of the Senior Beneficiaries and the Subordinate Beneficiaries, and not
for the Holders of the Class C Notes. Immediately upon the delivery of any
series of Class A Notes or Class B Notes, and from the proceeds thereof or, at
the option of the Corporation, from any amounts to be transferred thereto from
the Surplus Fund pursuant to Section 4.8 hereof and from any other available
moneys of the Corporation not otherwise credited to or payable into any Fund or
Account under this Indenture or otherwise subject to the pledge and security
interest created by this Indenture, the Trustee shall credit to the Reserve Fund
the amount, if any, specified in the Supplemental Indenture providing for the
issuance of that series of Notes, such that upon issuance of such Notes, the
Balance in the Reserve Fund shall not be less than the Reserve Fund Requirement.
If on any Monthly Payment Date the Balance in the Reserve Fund shall be
less than the Reserve Fund Requirement, the Trustee shall transfer and credit
thereto an amount equal to the deficiency from the following Funds and Accounts
in the following order of priority: the Repayment Account (to the extent not
required for credit to the Indemnification Fund, the Note Fund or the
Acquisition Fund), the Income Account (to the extent not required for credit to
the Indemnification Fund, the Note Fund, the Acquisition Fund or the
Administration Fund) and the Surplus Fund (to the extent not required for credit
to the Indemnification Fund, the Note Fund or the Administration Fund);
provided, however, that any such transfer from the Surplus Fund shall be made
only to the extent that that portion of the Balance thereof not consisting of
Eligible Loans is sufficient therefor.
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The Balance in the Reserve Fund shall be used and applied solely for
(i) transfers to the Indemnification Fund to the extent necessary, after
transfers thereto from the Revenue Fund and the Surplus Fund, to make any
deposit to the credit of the Indemnification Fund required by Section 4.5
hereof, and (ii) after such transfer, if any, to be made pursuant to the
preceding clause (i) has been taken into account, the payment when due of Debt
Service on the Class A Notes, the Class B Notes and the Other Obligations and
the purchase price of Class A Notes and Class B Notes on a Purchase Date or
Mandatory Tender Date and the other purposes specified in Section 4.7 hereof,
and shall be so used and applied by transfer by the Trustee to the credit of the
Note Fund, (a) at any time and to the extent that the Balance therein and the
Balances available for deposit to the credit thereof from the Revenue Fund and
the Surplus Fund (other than that portion of the Balance thereof consisting of
Eligible Loans) are insufficient to meet the requirements specified in Section
4.7 hereof for deposit to the credit of the Note Fund at such time (provided,
however, that such amounts shall be applied, first, to the payment of interest
on the Class A Notes and the payment of Other Senior Obligations payable from
the Interest Account, second, to the payment of principal and the purchase price
of the Class A Notes and the payment of Other Senior Obligations payable from
the Principal Account, third, to the payment of interest on the Class B Notes
and the payment of Other Subordinate Obligations payable from the Interest
Account, and, fourth, to the payment of principal and the purchase price of the
Class B Notes and the payment of Other Subordinate Obligations payable from the
Principal Account), and (b) at any time when a portion of the Balance therein is
required to be transferred to the Retirement Account to pay a portion of the
Redemption Price of Class A Notes or Class B Notes to be redeemed as provided in
a Supplemental Indenture relating thereto; provided, however, that on the Stated
Maturity or any Redemption Date of any Class A Notes or Class B Notes, amounts
in the Reserve Fund shall, upon Corporation Order, be applied to the payment at
maturity or redemption of all Outstanding Class A Notes or Class B Notes of a
series, to the extent that such application, and payment of all deposits to be
made to the credit of the Indemnification Fund required by Section 4.5 hereof
upon such redemption, will not reduce the Balance of the Reserve Fund below the
Reserve Fund Requirement (calculated as though the Notes to be retired on such
Stated Maturity or Redemption Date were not Outstanding as of the date of such
calculation), and, after giving effect to such payment or redemption, the
conditions of Section 10.2 will be met; and provided, further, that at any time
when the aggregate of the Balances in the Note Fund, the Reserve Fund and the
Surplus Fund (exclusive of Student Loans) equals an amount sufficient to
discharge and satisfy the obligations of the Corporation with respect to all of
the Outstanding Class A Notes, Class B Notes and Other Obligations and to make
all deposits to the credit of the Indemnification Fund required by Section 4.5
hereof, all in the manner described in Section 11.1 hereof, said Balances shall,
upon Corporation Order, be so applied. Notwithstanding the foregoing, if on any
Monthly Payment Date the Balance in the Reserve Fund exceeds the Reserve Fund
Requirement, such excess shall, upon Corporation Order, be transferred to the
Principal Account, to the extent necessary to make the deposits required to be
made to the credit of the Principal Account on such Monthly Payment Date
pursuant to the provisions of Section 4.7.2 hereof, whether or not other moneys
are available to make such deposits.
Pending transfers from the Reserve Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from such investments shall be deposited in the Revenue
Fund as provided in Section 4.6 hereof.
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Section 4.5. Indemnification Fund. The Trustee shall, upon receipt of
any notice that an amount is payable from the Trust Estate pursuant to the
indemnification provisions of a Joint Sharing Agreement, immediately furnish a
copy thereof to the Corporation. Thereafter, the Corporation and the Trustee
shall promptly determine if, and the extent to which, such amount is so payable
and, if and to the extent it is, the Trustee shall transfer such amount to the
Indemnification Fund from the Balances in the Revenue Fund, the Surplus Fund
(other than that portion of the Balance therein consisting of Eligible Loans),
the Reserve Fund, the Administration Fund, the Surplus Fund (including any
portion of the Balance therein consisting of Eligible Loans), the Retirement
Account, the Principal Account, the Interest Account and the Acquisition Fund,
in that order of priority. Any amount so transferred to the Indemnification Fund
shall be immediately paid by the Trustee to the appropriate party or parties.
Amounts in the Indemnification Fund shall be used only for the purposes
specified in the preceding paragraph, and shall not be available for any other
purpose, including, but not limited to, payment of Debt Service on or the
purchase price of the Notes or Other Obligations.
Section 4.6. Revenue Fund. The Trustee and any Deposit Agent shall
credit to the Revenue Fund: (i) all amounts received as interest, including
federal interest subsidy payments, and principal payments with respect to
Financed Student Loans, including all Guarantee payments and Special Allowance
Payments with respect to Financed Student Loans (excluding, unless otherwise
provided in a Supplemental Indenture, any federal interest subsidy payments and
Special Allowance Payments that accrued prior to the date on which such Student
Loans were Financed), (ii) unless otherwise provided in a Supplemental
Indenture, proceeds of the resale to a Lender or SLFC of any Financed Student
Loans pursuant to such Lender's or SLFC's repurchase obligation under the
applicable Student Loan Purchase Agreement, (iii) all amounts received as
earnings on or income from Investment Securities in the Acquisition Fund, the
Reserve Fund, the Administration Fund, the Surplus Fund and the Note Fund, (iv)
all Non-Delivery Fees, (v) all amounts to be transferred to the Revenue Fund
from the Indemnification Fund, (vi) any amounts received by the Trustee pursuant
to the indemnification provisions of any Joint Sharing Agreement, and (vii) all
amounts to be transferred to the Revenue Fund from the Alternative Loan
Guarantee Fund.
Pending transfers from the Revenue Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from said investments shall be retained therein.
The Corporation shall cause all amounts required to be credited to the
Revenue Fund, upon receipt by the Corporation, a Lender, SLFC, a Transferor or a
Servicer, or any agent thereof, as the case may be, to be forthwith transmitted
to the Trustee or any Deposit Agent therefor for such credit. On each Monthly
Payment Date and on any other date on which the Balance in the Note Fund is not
sufficient to pay all amounts payable therefrom on such date, all such moneys
theretofore received and then held by a Deposit Agent shall be transferred to
the Trustee. The Trustee shall deposit and credit all revenues to be credited to
the Revenue Fund as follows: all such revenues received as payments of or in
respect of principal of Financed Student Loans shall be credited by the Trustee
forthwith upon receipt to the Repayment Account; and all
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other revenues and amounts, including all such revenues received as payments of
or in respect of interest on or Special Allowance Payments with respect to
Financed Student Loans, income from Investment Securities and Non-Delivery Fees,
shall be credited by the Trustee forthwith upon receipt to the Income Account.
On each Monthly Payment Date and on any other date on which the Balance
in the Note Fund is not sufficient to pay all amounts payable therefrom on such
date, the Trustee shall, from the moneys received since the preceding Monthly
Payment Date in the Repayment Account, (1) make any periodic rebate fee payments
required to be made to the Secretary of Education in connection with Financed
Student Loans, and (2) transfer the remainder of such moneys, as follows:
First, to the credit of the Indemnification Fund to the extent
and in the manner provided in Section 4.5 hereof; second, to the credit
of the Interest Account to the extent and in the manner provided in
Section 4.7.1 hereof for the payment of interest on Class A Notes or
Other Senior Obligations payable therefrom; third, to the credit of the
Principal Account to the extent and in the manner provided in
subsections (A) and (C) of Section 4.7.2 hereof for the redemption or
payment of principal or the purchase price of the Class A Notes or the
payment of Other Senior Obligations payable therefrom; fourth, to the
credit of the Retirement Account, to the extent and in the manner
provided in Section 4.7.3 hereof for the redemption of Class A Notes or
the payment of Other Senior Obligations payable therefrom; fifth, to
the credit of the Acquisition Fund to the extent and in the manner
provided in Section 4.2 hereof; sixth, to the credit of the Interest
Account to the extent and in the manner provided in Section 4.7.1
hereof for the payment of interest on Class B Notes or Other
Subordinate Obligations payable therefrom; seventh, to the credit of
the Principal Account to the extent and in the manner provided in
subsections (A) and (C) of Section 4.7.2 hereof for the payment of
principal or the purchase price of Class B Notes or the payment of
Other Subordinate Obligations payable therefrom; eighth, to the credit
of the Retirement Account, to the extent and in the manner provided in
Section 4.7.3 hereof for the redemption of Class B Notes or the payment
of Other Subordinate Obligations payable therefrom; ninth, to the
credit of the Reserve Fund to the extent and in the manner provided in
Section 4.4 hereof; tenth, to the credit of the Principal Account to
the extent and in the manner provided in Section 4.7.2(B) hereof for
the redemption of Class B Notes; eleventh, to the credit of the Special
Redemption and Prepayment Account to the extent and in the manner
provided in Section 4.8 hereof; twelfth, to the Alternative Loan
Guarantee Fund, the aggregate amount received by the Servicer and
deposited in the Revenue Fund with respect to Financed Alternative
Student Loans for which a transfer has been made from the Alternative
Loan Guarantee Fund, less the aggregate amount transferred to the
Alternative Loan Guarantee Fund from the Revenue Fund on previous
Monthly Payment Dates; and thirteenth, to the credit of the Surplus
Account in the manner provided in Section 4.8 hereof.
On each Monthly Payment Date and on any other date on which the Balance
in the Note Fund is not sufficient to pay all amounts payable therefrom on such
date, the Trustee shall, after transferring all amounts received in the
Repayment Account pursuant to the preceding paragraph, from the moneys received
since the preceding Monthly Payment Date in the Income
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Account, to the extent amounts in the Repayment Account were not sufficient
therefor, (1) make any periodic rebate fee payments required to be made to the
Secretary of Education in connection with Financed Student Loans, and (2)
transfer the remainder of such moneys as follows:
First, to the credit of the Indemnification Fund to the extent
and in the manner provided in Section 4.5 hereof; second, to the credit
of the Interest Account to the extent and in the manner provided in
Section 4.7.1 hereof for the payment of interest on Class A Notes or
Other Senior Obligations payable therefrom; third, to the credit of the
Principal Account to the extent and in the manner provided in
subsections (A) and (C) of Section 4.7.2 hereof for the redemption or
payment of principal or the purchase price of Class A Notes or the
payment of Other Senior Obligations payable therefrom; fourth, to the
credit of the Retirement Account, to the extent and in the manner
provided in Section 4.7.3 hereof for the redemption of Class A Notes or
for the payment of Other Senior Obligations payable therefrom; fifth,
to the credit of the Acquisition Fund to the extent and in the manner
provided in Section 4.2 hereof; sixth, to the credit of the Interest
Account to the extent and in the manner provided in Section 4.7.1
hereof for the payment of interest on Class B Notes or Other
Subordinate Obligations payable therefrom; seventh, to the credit of
the Principal Account to the extent and in the manner provided in
subsections (A) and (C) of Section 4.7.2 hereof for the payment of
principal or the purchase price of Class B Notes or the payment of
Other Subordinate Obligations payable therefrom; eighth, to the credit
of the Retirement Account, to the extent and in the manner provided in
Section 4.7.3 hereof for the redemption of Class B Notes or the payment
of Other Subordinate Obligations payable therefrom; ninth, to the
credit of the Administration Fund to the extent and in the manner
provided in Section 4.3 hereof; tenth, to the credit of the Reserve
Fund to the extent and in the manner provided in Section 4.4 hereof;
eleventh, to the credit of the Principal Account to the extent and in
the manner provided in Section 4.7.2(B) hereof for the redemption of
Class B Notes; twelfth, to the credit of the Special Redemption and
Prepayment Account to the extent and in the manner provided in Section
4.8 hereof; twelfth, to the Alternative Loan Guarantee Fund, the
aggregate amount received by the Servicer and deposited in the Revenue
Fund with respect to Financed Alternative Student Loans for which a
transfer has been made from the Alternative Loan Guarantee Fund, less
the aggregate amount transferred to the Alternative Loan Guarantee Fund
from the Revenue Fund on previous Monthly Payment Dates; and
fourteenth, to the credit of the Surplus Account in the manner provided
in Section 4.8 hereof.
Section 4.7. Note Fund. The Note Fund shall be used only for the
payment when due of principal of, premium, if any, and interest on the Class A
Notes and the Class B Notes, the purchase price of the Class A Notes and the
Class B Notes to be purchased on a Purchase Date or Mandatory Tender Date or
otherwise in accordance with Section 10.7 hereof, Other Obligations and
Carry-Over Amounts (including any accrued interest thereon) and to make
transfers to the credit of the Indemnification Fund required by Section 4.5
hereof. The principal of and interest on the Class C Notes shall be payable from
the Surplus Fund as provided in Section 4.8 hereof.
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The Trustee shall identify the Monthly Payment Date for each
installment of interest, installment of principal for Serial Notes and sinking
fund installment for Term Notes with respect to each series of Notes.
Section 4.7.1. Interest Account. With respect to each series of Class A
Notes or Class B Notes, the Trustee shall, upon delivery to the original
purchasers thereof and from the proceeds thereof, credit to the Interest Account
the amount, if any, specified in the Supplemental Indenture providing for the
issuance of such series of Notes. The Trustee shall also deposit in the Interest
Account (i) that portion of the proceeds from the sale of Financed Student Loans
as is specified in Section 4.2 hereof, (ii) that portion of the proceeds from
the sale of the Corporation's bonds, notes or other evidences of indebtedness,
if any, to be used to pay interest on the Class A Notes or the Class B Notes,
(iii) all Counterparty Swap Payments, (iv) all payments under any Credit
Enhancement Facilities by Credit Facility Providers to be used to pay interest
on Class A Notes or Class B Notes, and (v) all amounts required to be
transferred thereto from the Funds and Accounts specified in the last sentence
of the following paragraph. The moneys in the Interest Account shall be invested
in Investment Securities as provided in Section 4.11 hereof, and any earnings on
or income from such investments shall be deposited in the Revenue Fund as
provided in Section 4.6 hereof.
To provide for the payment of each installment of interest which falls
due upon Class A Notes or Class B Notes on each regularly scheduled Interest
Payment Date and all Corporation Swap Payments and fees to a Credit Facility
Provider payable on such Interest Payment Date, the Trustee shall make six (6)
equal monthly deposits to the credit of the Interest Account not later than the
six (6) Monthly Payment Dates preceding such Interest Payment Date, to aggregate
the full amount of such interest, payment and fees, except that if the first
such Interest Payment Date occurs in six (6) months and fifteen (15) days or
less from the date on which the Class A Notes or Class B Notes of such series
are delivered to the initial purchasers thereof, then the Trustee shall make
equal monthly deposits to the credit of the Interest Account not later than each
Monthly Payment Date beginning with the calendar month following the calendar
month in which such Notes are delivered to the initial purchasers and ending
with the last such Monthly Payment Date prior to such first Interest Payment
Date (provided, however, with respect to any Variable Rate Notes, deposits shall
be made in an amount equal to the interest accrued on such Notes from the last
previous Monthly Payment Date or regularly scheduled Interest Payment Date
therefor, whichever is later, to that Monthly Payment Date or, in the case of
the last Monthly Payment Date preceding a regularly scheduled Interest Payment
Date, to such regularly scheduled Interest Payment Date), to aggregate the full
amount of such interest, payment and fees, and except that the Corporation shall
receive a credit against such payments for any accrued Counterparty Swap
Payments that are to be paid on or before the next regularly scheduled Interest
Payment Date if the Swap Counterparty is not then in default in its obligations
under the Swap Agreement and if the Swap Counterparty or any obligor under a
related Swap Counterparty Guarantee has unsecured long-term debt rated by each
Rating Agency in any of its three (3) highest Rating Categories. Anything in
this paragraph to the contrary notwithstanding, the Trustee shall, if so
instructed in writing by an Authorized Officer of the Corporation, deposit to
the credit of the Interest Account on any Monthly Payment Date for any
installment of interest a larger amount than is required to be made on such
Monthly Payment Date. If, on any Interest Payment Date (including any Redemption
Date occurring on a date that is not a regularly
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scheduled Interest Payment Date) or other date on which Class A Notes or Class B
Notes are to be purchased in accordance with Section 4.7.2(F) or 4.7.3 hereof,
moneys in the Interest Account are insufficient to pay the accrued interest due
on the Class A Notes and Class B Notes and all Corporation Swap Payments and
fees to a Credit Facility Provider payable on such Interest Payment Date or
constituting a portion of the purchase price of Notes to be so purchased, the
Trustee shall immediately deposit to the credit of the Interest Account an
amount equal to such deficiency. In making the deposits required to be deposited
and credited to the Interest Account, the amounts credited to the Interest
Account pursuant to the first two (2) sentences of this Section and other
deposits and credits otherwise made or required to be made to the Interest
Account shall, to the extent available for such purpose, be taken into
consideration and allowed for. Each deposit required by this Section 4.7.1 to
pay the foregoing amounts shall be made by transfer from the following Funds and
Accounts, in the following order of priority: the Revenue Fund, the Surplus Fund
(other than that portion of the Balance thereof consisting of Eligible Loans),
the Reserve Fund, the Administration Fund, the Surplus Fund (including any
portion of the Balance thereof consisting of Eligible Loans), the Retirement
Account, the Principal Account and, as to Class A Notes and Other Senior
Obligations only, the Acquisition Fund (other than that portion of the Balance
thereof consisting of Student Loans); provided that such transfers shall be made
from the Retirement Account or the Principal Account in respect of Subordinate
Obligations only if, and to the extent, any amounts to be so transferred are in
excess of the requirements of such Accounts with respect to Senior Obligations
payable therefrom.
If, as of any regularly scheduled Interest Payment Date, any Carry-Over
Amount (including any accrued interest thereon) is due and payable with respect
to a series of Notes, as provided in the related Supplemental Indenture, the
Trustee shall transfer to the Interest Account (to the extent amounts are
available therefor in the Surplus Account in accordance with the second
paragraph of Section 4.8 hereof, after taking into account all other amounts
payable from the Surplus Fund in accordance with such paragraph on such Interest
Payment Date) an amount equal to such Carry-Over Amount (including any accrued
interest thereon) so due and payable. The Trustee shall make payment of any
Carry-Over Amount (and any interest accrued thereon) on an Interest Payment Date
in the same manner as it pays interest on the related series of Notes on such
Interest Payment Date.
The moneys in the Interest Account required for the payment of interest
on the Class A Notes or the Class B Notes of any series (including, without
limitation, the payment of that portion of the purchase price of Class A Notes
or Class B Notes purchased pursuant to Section 4.7.2(F) or 4.7.3 hereof
attributable to accrued interest thereon), any Corporation Swap Payments or fees
payable to a Credit Facility Provider under a Credit Enhancement Facility or
Demand Purchase Agreement or any Carry-Over Amount (including any accrued
interest thereon) shall be applied by the Trustee to the payment of such
interest or amounts when due without further authorization or direction.
Balances in the Interest Account shall be transferred to the credit of
the Indemnification Fund to the extent necessary, after transfers thereto from
the Revenue Fund, the Surplus Fund, the Reserve Fund, the Administration Fund,
the Retirement Account and the Principal Account, to make any deposit to the
credit of the Indemnification Fund required by Section 4.5 hereof.
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Balances in the Interest Account shall be transferred to the credit of
the Principal Account to the extent necessary, after transfers thereto from the
Revenue Fund, the Surplus Fund, the Reserve Fund and the Administration Fund, to
make payment of the principal and purchase price of Class A Notes, as provided
in Section 4.7.2 hereof.
The moneys in the Interest Account required for (A) transfer to the
Indemnification Fund as hereinbefore provided shall be transferred to such Fund
without further authorization or direction, and (B) transfer to the Principal
Account for payment of the principal or purchase price of Class A Notes, as
provided in Section 4.7.2 hereof, shall be transferred to such Account without
further authorization or direction.
Notwithstanding any other provisions of this Article Four, deposits to
the credit of the Interest Account required to be made on each Monthly Payment
Date by this Section 4.7.1 or on any other date on which the Balance in the
Interest Account is not sufficient to pay all amounts payable therefrom on such
date, and any other amounts at any time on deposit in the Interest Account,
shall be applied in the following order of priority: first, to the extent
hereinabove provided, for transfers to the Indemnification Fund; second, to the
payment of interest on all Class A Notes, Corporation Swap Payments under Senior
Swap Agreements and fees payable to Senior Credit Facility Providers under a
Senior Credit Enhancement Facility or Senior Demand Purchase Agreement, and if
such money (after the transfers hereinabove described, including all amounts, to
the extent necessary, in the Principal Account) is less than such interest and
Other Senior Obligations on an Interest Payment Date, such money shall be
applied, pro rata, among such indebtedness based upon such amounts then owing to
Senior Beneficiaries and to be paid from the Interest Account; third, by
transfer to the Principal Account or the Retirement Account, to the extent
required under Section 4.7.2 and 4.7.3 hereof, in respect of amounts with
respect to the principal of the Class A Notes or other amounts owed to Other
Senior Beneficiaries payable therefrom; fourth, to the payment of interest on
all Class B Notes, Corporation Swap Payments under Subordinate Swap Agreements
and fees payable to Subordinate Credit Facility Providers, and if such money
(after the transfers hereinabove described, including all amounts, to the extent
necessary, in the Principal Account over and above the amount on deposit therein
to meet any accrued obligations to pay principal of the Class A Notes or
amounts, other than fees, to Senior Credit Facility Providers) is less than such
interest and Other Subordinate Obligations on an Interest Payment Date, such
money shall be applied, pro rata, among such indebtedness based upon such
amounts then owing to Subordinate Beneficiaries and to be paid from the Interest
Account; fifth, to the payment of all Carry-Over Amounts (including any accrued
interest thereon) due and payable on all series of Class A Notes, and if such
money is less than such Carry-Over Amounts (including any accrued interest
thereon) on an Interest Payment Date, such money shall be applied, pro rata,
among such Carry-Over Amounts (including any accrued interest thereon) based
upon such amounts then otherwise due and payable to Class A Noteholders and to
be paid from the Interest Account; and sixth, to the payment of all Carry-Over
Amounts (including any accrued interest thereon) due and payable on all series
of Class B Notes, and if such money is less than such Carry-Over Amounts
(including any accrued interest thereon) on an Interest Payment Date, such money
shall be applied, pro rata, among such Carry-Over Amounts (including any accrued
interest thereon) based upon such amounts then otherwise due and payable to
Class B Noteholders and to be paid from the Interest Account.
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Other Obligations payable from the Interest Account shall include
reimbursement to any Credit Facility Provider for interest paid on Class A Notes
or Class B Notes from amounts paid by the Credit Facility Provider under a
Credit Enhancement Facility.
Section 4.7.2. Principal Account. In making the payments, deposits and
credits required by subsections (A), (B) and (C) of this Section 4.7.2, an
amount deposited and credited or required to be deposited and credited to the
Principal Account representing premium on Term Notes paid as part of the
purchase price thereof and any other deposits and credits otherwise made or
required to be made to the Principal Account shall, to the extent available for
such purpose, be taken into consideration and allowed for. The Trustee shall
also deposit to the credit of Principal Account: (i) that portion of the
proceeds from the sale of Financed Student Loans as is specified in Section 4.2
hereof, (ii) that portion of the proceeds from the sale of the Corporation's
bonds, notes or other evidences of indebtedness, if any, to be used to pay
principal of the Class A Notes and the Class B Notes on a Principal Payment
Date, (iii) all payments under any Credit Enhancement Facility or Demand
Purchase Agreement to be used to pay principal of Class A Notes or Class B Notes
or the purchase price of Class A Notes or Class B Notes to be purchased on a
Purchase Date or Mandatory Tender Date, and (iv) all amounts required to be
transferred thereto from the Funds and Accounts specified in subsection (D) of
this Section 4.7.2.
Other Obligations payable from the Principal Account shall include
reimbursement to any Credit Facility Provider for principal or the purchase
price paid on Class A Notes or Class B Notes from amounts paid by the Credit
Facility Provider under a Credit Enhancement Facility or Demand Purchase
Agreement.
(A) To provide for the payment of each installment of principal which
falls due upon Class A Serial Notes, Class B Serial Notes or Class B Term Notes
at the Stated Maturity thereof or Class A Term Notes on a Sinking Fund Payment
Date therefor, the Trustee shall make six (6) (if the principal of Notes of such
series is payable semiannually) or twelve (12) (if the principal of Notes of
such series is payable annually) equal monthly deposits to the credit of the
Principal Account not later than the six (6) or twelve (12) Monthly Payment
Dates, as the case may be, preceding such Principal Payment Date, to aggregate
the full amount of such installment, except that if the first such Principal
Payment Date of a series of Notes occurs within twelve (12) months and fifteen
(15) days after the date on which the Class A Notes or Class B Notes of such
series are delivered to the initial purchasers thereof, then the Trustee shall
make equal monthly deposits to the credit of the Principal Account not later
than each Monthly Payment Date for such installment beginning with the calendar
month following the month in which such Notes are delivered to the initial
purchasers and ending with the last such Monthly Payment Date prior to such
first Principal Payment Date, to aggregate the full amount of such installment.
In making the deposits and credits required by this subsection (A), any amounts
deposited or required to be deposited and credited to the Principal Account
representing premium on Class A or Class B Serial Notes or Class A Term Notes
paid as part of the purchase price thereof and any other deposits and credits
otherwise made or required to be made to the Principal Account shall, to the
extent available for such purpose, be taken into consideration and allowed for.
The moneys in the Principal Account required for the payment of the
principal of Class A Serial Notes, Class B Serial Notes or Class B Term Notes at
the Stated Maturity thereof
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or of Class A Term Notes on a Sinking Fund Payment Date therefor or for the
payment of Other Obligations (other than fees, Corporation Swap Payments and
reimbursements for amounts paid under a Credit Enhancement Facility to pay
interest on Class A Notes or Class B Notes, all of which are payable from the
Interest Account) shall be applied by the Trustee to such payment when due
without further authorization or direction, subject, however, to subsection (D)
of this Section 4.7.2.
(B) To meet each specified sinking fund installment which falls due
upon Class B Term Notes on each Sinking Fund Payment Date for each series of
Class B Notes which includes Term Notes (other than the Stated Maturity thereof,
as to which subsection (A) of this Section 4.7.2 shall govern), the Trustee
shall:
(1) determine (commencing as of the Monthly Payment Date not
less than seven (7) calendar months, if such Sinking Fund Payment Dates
occur semiannually, or twelve (12) calendar months, if such Sinking
Fund Payment Dates occur annually, before the first Sinking Fund
Payment Date for Class B Term Notes of such series) with regard to each
specified sinking fund installment which falls due upon such Class B
Term Notes on each Sinking Fund Payment Date (other than the Stated
Maturity thereof) the amount which, if deposited to the credit of the
Principal Account on each of the six (6) successive Monthly Payment
Dates, if such Sinking Fund Payment Dates occur semiannually, or on
each of the eleven (11) successive Monthly Payment Dates, if such
Sinking Fund Payment Dates occur annually, for such installment which
are before the last Monthly Payment Date before such Sinking Fund
Payment Date, would in the aggregate equal the full amount of such
installment, except that if the installment due on the first Sinking
Fund Payment Date for the Class B Term Notes of any series is less than
seven (7) calendar months, if such Sinking Fund Payment Dates occur
semiannually, or twelve (12) calendar months, if such Sinking Fund
Payment Dates occur annually, after the month in which such Notes are
delivered to the initial purchasers thereof, the Trustee shall
determine the amount which, if deposited to the credit of the Principal
Account on each of the Monthly Payment Dates occurring during the
period beginning with the calendar month following the month in which
such Notes are delivered to the initial purchasers thereof and ending
with the next-to-the-last Monthly Payment Date prior to such Sinking
Fund Payment Date, would in the aggregate equal the full amount of such
installment;
(2) express the monthly amount so determined for each such
sinking fund installment on a cumulative basis, so that the cumulative
amount for any Monthly Payment Date for that installment will be the
sum of the amount for such Monthly Payment Date and the amounts of the
preceding such Monthly Payment Dates; and
(3) on each such Monthly Payment Date (a) determine whether in
fact and to what extent the contingency, if any, specified in the
Supplemental Indenture authorizing the issuance of such Notes has been
satisfied which requires a deposit on such Monthly Payment Date to the
credit of the Principal Account on account of such sinking fund
installment, as specified in the Supplemental Indenture authorizing
such series of Notes, (b) determine the amount of any such deposit if
so required, which for each such Monthly Payment Date shall not exceed
the cumulative amount therefor, less the sum of all prior
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deposits made on account of such sinking fund installment, and (c)
deposit to the credit of the Principal Account any amount so determined
to be required to be deposited on such Monthly Payment Date.
To the extent that on any such Sinking Fund Payment Date (other than
the Stated Maturity of such Notes) the aggregate of the deposits thus actually
made to the credit of the Principal Account as of the next-to-the-last Monthly
Payment Date before such Sinking Fund Payment Date on account of the sinking
fund installment due on such Sinking Fund Payment Date shall be less than the
full amount of such sinking fund installment, the amount of such deficiency
shall be added to the amount of the sinking fund installment otherwise due on
the next Sinking Fund Payment Date and the increased amount shall thereupon be
deemed to be the amount due for the next sinking fund installment. However,
nothing contained in this paragraph shall be construed to create an Event of
Default in the event of any such deficiency unless a sinking fund installment of
such Class B Term Notes shall not only be due and not applied to the redemption
or purchase of Notes in accordance with the provisions of the Supplemental
Indenture authorizing the issuance of the Notes of such series and subsection
(F) of this Section 4.7.2, but also all contingencies, if any, specified in such
Supplemental Indenture upon the obligation so to apply it as of such time shall
in fact have been satisfied. Any such contingencies specified in a Supplemental
Indenture authorizing the issuance of a series of Class B Notes must be
identical to the contingencies, if any, specified in any other Supplemental
Indenture authorizing a series of Class B Notes any Note of which is then
Outstanding.
Subject to subsection (D) of this Section 4.7.2, in the event that, in
any year in which sinking fund installments are due with respect to two (2) or
more series of Class B Notes, payments on account of such sinking fund
installments are not deposited and accumulated in the Principal Account in the
full amount thereof (taking into account any reduction in or credit against such
installments as provided in the Supplemental Indenture pursuant to which such
Class B Notes were issued) on or before the next-to-the-last Monthly Payment
Date prior to the Sinking Fund Payment Date with respect thereto, such payments
as shall have been accumulated shall be allocated as follows: (i) first, to the
payment of any such Class B Term Notes whose Stated Maturity is such Sinking
Fund Payment Date (as provided in subsection (A) of this Section 4.7.2), and
(ii) otherwise, between the series of Class B Notes in proportion to the
respective total amounts of sinking fund installments due on such Sinking Fund
Payment Date.
The Trustee shall without further authorization or direction apply the
moneys deposited to the credit of the Principal Account pursuant to this
subsection (B), on each Sinking Fund Payment Date, to the retirement of the
Class B Term Notes in accordance with the provisions in the Supplemental
Indenture pursuant to which such Notes were issued; subject, however, to
subsection (D) of this Section 4.7.2. The Trustee shall give notice of all such
redemptions, in the name and on behalf of the Corporation, in accordance with
the provisions of Article Ten hereof.
(C) In the event that the Corporation is required to furnish moneys to
the Depositary to purchase Notes on a Purchase Date or Mandatory Tender Date,
the Trustee shall, subject to the applicable provisions of the related
Supplemental Indenture, immediately deposit to the credit of the Principal
Account moneys sufficient to pay the purchase price thereof.
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Moneys in the Principal Account required for the payment of the purchase price
of such Notes shall, subject to the applicable provisions of the related
Supplemental Indenture, be applied by the Trustee to such payment without
further authorization or direction.
(D) Each deposit required to be made to the credit of the Principal
Account by subsections (A), (B) and (C) of this Section 4.7.2 shall be made by
transfer from the following Funds, in the following order of priority: (1) in
the case of subsection (A) and subsection (C), the Revenue Fund, the Surplus
Fund (other than that portion of the Balance thereof consisting of Eligible
Loans), the Reserve Fund, the Administration Fund, the Surplus Fund (including
that portion of the Balance thereof consisting of Eligible Loans), and (2) in
the case of subsection (B), the Revenue Fund and the Surplus Fund (other than
that portion of the Balance thereof consisting of Eligible Loans); provided,
however, that if principal is payable on Class A Notes at the Stated Maturity
thereof or upon a Sinking Fund Payment Date therefor, or the purchase price is
payable on Class A Notes on a Purchase Date or Mandatory Tender Date, and money
credited to the Principal Account, after the foregoing transfers, is
insufficient to pay such principal or purchase price, funds shall be
transferred, to the extent necessary, to the Principal Account for this purpose
from (i) the Interest Account, but only to the extent that the Balance in the
Interest Account exceeds any then accrued payments of interest on the Class A
Notes, Corporation Swap Payments under Senior Swap Agreements and fees owing to
Senior Credit Facility Providers and (ii) thereafter from the Acquisition Fund
(other than that portion of the Balance thereof consisting of Student Loans).
Notwithstanding any other provisions of this Article Four, deposits to
the credit of the Principal Account required to be made on each Monthly Payment
Date by this Section 4.7.2 or on any other date on which the Balance in the
Principal Account is not sufficient to pay all amounts payable therefrom on such
date, and any other amounts on deposit in the Principal Account, shall be
applied in the following order of priority: first, to the extent required by
subsection (E) of this Section 4.7.2, for transfer to the Indemnification Fund;
second, to the extent required by Section 4.7.1, to the Interest Account for the
payment of interest on Class A Notes and Other Senior Obligations payable
therefrom; third, to the payment of Class A Notes at their Stated Maturity or on
a Sinking Fund Payment Date or amounts due on Other Senior Obligations payable
from the Principal Account; fourth, to the payment of the purchase price of
Class A Notes on a Purchase Date or Mandatory Tender Date; fifth, to the extent
required by Section 4.7.1, to the Interest Account for the payment of interest
on Class B Notes and Other Subordinate Obligations payable therefrom; sixth, to
the amounts due with respect to Class B Notes to be paid at their Stated
Maturity or amounts due on Other Subordinate Obligations payable from the
Principal Account; seventh, to the payment of the purchase price of Class B
Notes on a Purchase Date or Mandatory Tender Date; and, eighth, to the amounts
due with respect to Class B Term Notes to be redeemed on a Sinking Fund Payment
Date. Any moneys in the Principal Account required to be so transferred to the
Interest Account shall be transferred by the Trustee to such Account without
further authorization or direction.
(E) Balances in the Principal Account shall be transferred to the
credit of the Indemnification Fund to the extent necessary, after transfers
thereto from the Revenue Fund, the Surplus Fund, the Reserve Fund, the
Administration Fund and the Retirement Account, to make any deposit to the
credit of the Indemnification Fund required by Section 4.5 hereof. Any
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moneys in the Principal Account required to be so transferred to the
Indemnification Fund shall be transferred by the Trustee to such Fund without
further authorization or direction.
(F) Subject to Section 10.2 hereof, balances in the Principal Account
may also be applied to the purchase of Class A Notes or Class B Notes at a
purchase price (including any brokerage or other charges) not to exceed the
Principal Amount thereof plus accrued interest, in accordance with the
provisions of Section 10.7 hereof, as determined by the Corporation at such
time, provided the Trustee shall have first certified that no deficiencies exist
at such time in the Note Fund or the Indemnification Fund. Any such purchase
shall be limited to those Class A Notes or Class B Notes whose Stated Maturity
or Sinking Fund Payment Date is the next succeeding Principal Payment Date. If
any moneys credited to the Principal Account for the retirement of the Term
Notes are applied to the purchase of such Notes as provided in this subsection
(F), the Principal Amount of such Notes to be redeemed on the next respective
Sinking Fund Payment Date shall be reduced by the Principal Amount of the Notes
so purchased; provided, however, that no Term Notes shall be so purchased during
the interval between the date on which notice of redemption of said Notes on a
Sinking Fund Payment Date is given and the date of redemption set forth in such
notice, unless the Notes so purchased are Notes called for redemption in such
notice or are purchased from moneys other than those credited to the Principal
Account with respect to sinking fund installments.
Any purchase of Class A Notes or Class B Notes pursuant to this
subsection (F) may be made with or without tenders of Notes and at either public
or private sale.
(G) All Class A Notes or Class B Notes retired by redemption, purchase
(other than on a Purchase Date or Mandatory Tender Date) or payment at maturity
pursuant to this Section 4.7.2 shall be canceled and shall not be reissued. The
accrued interest to be paid on the redemption, purchase (other than on a
Purchase Date or Mandatory Tender Date) or payment at Stated Maturity of such
Notes shall be paid from the Interest Account. Any Notes purchased or otherwise
Deemed Tendered on a Purchase Date or Mandatory Tender Date with moneys
furnished pursuant to this Section 4.7.2 shall not be canceled or the
indebtedness represented thereby otherwise extinguished except at the direction
of the Corporation, it being the intention of the Corporation that, absent such
a direction, such Notes remain outstanding and represent a continuing
indebtedness of the Corporation, whether such Notes are held by the Corporation,
the Remarketing Agent or others for the account of the Corporation, any
Remarketing Agent for its own account, any Depositary, the Trustee, any Credit
Facility Provider or any other purchaser.
(H) The moneys in the Principal Account shall be invested in Investment
Securities as provided in Section 4.11 hereof, and any earnings on or income
from such investments shall be deposited in the Revenue Fund as provided in
Section 4.6 hereof.
Section 4.7.3. Retirement Account. The Trustee shall deposit to the
credit of the Retirement Account (i) any amounts transferred thereto from the
Reserve Fund and the Surplus Fund, (ii) that portion of the proceeds from the
sale of the Corporation's bonds, notes or other evidences of indebtedness, if
any, to be used to pay the principal or Redemption Price of Class A Notes or
Class B Notes on a date other than the Stated Maturity thereof or a Sinking Fund
Payment Date therefor, and (iii) all payments made by a Credit Facility Provider
under a Credit
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Enhancement Facility to be used to pay the Redemption Price of Class A Notes or
Class B Notes payable from the Retirement Account. All Class A Notes or Class B
Notes which are to be retired other than with moneys in the Principal Account,
or the principal of which is to be prepaid, shall be retired or prepaid with
moneys deposited to the credit of the Retirement Account.
Other Obligations payable from the Retirement Account shall include
reimbursement to any Credit Facility Provider for the Redemption Price or amount
or prepayment paid on Class A Notes or Class B Notes from amounts paid by the
Credit Facility Provider under a Credit Enhancement Facility.
Balances in the Retirement Account shall be transferred to the credit
of the Indemnification Fund to the extent necessary, after transfers thereto
from the Revenue Fund, the Surplus Fund, the Reserve Fund and the Administration
Fund, to make any deposit to the credit of the Indemnification Fund required by
Section 4.5 hereof. Any moneys in the Retirement Account required to be so
transferred to the Indemnification Fund shall be transferred by the Trustee to
such Fund without further authorization or direction.
After taking into account any transfers required by the preceding
paragraph, Balances in the Retirement Account shall be transferred to the credit
of the Interest Account to the extent required by Section 4.7.1 hereof in
respect of any accrued obligation in respect of payment of interest on Class A
Notes or Class B Notes and payment of Other Obligations payable from the
Interest Account. Any moneys in the Retirement Account required to be so
transferred to the Interest Account shall be transferred by the Trustee to the
Interest Account without further authorization or direction.
Subject to Section 10.2 hereof, balances in the Retirement Account may
also be applied to the purchase of Class A Notes or Class B Notes at a purchase
price (including any brokerage or other charges) not to exceed the Principal
Amount thereof plus accrued interest plus any then applicable redemption
premium, in accordance with the provisions of Section 10.7 hereof, as determined
by the Corporation at such time; provided the Trustee shall have first certified
that no deficiencies exist at such time in the Note Fund or the Indemnification
Fund.
In the event that Class A Notes or Class B Notes are to be redeemed
from the Retirement Account on a date other than a regularly scheduled Interest
Payment Date or are to be purchased from Balances in the Retirement Account
pursuant to the preceding paragraph, accrued interest on such Notes shall
nonetheless be paid from the Interest Account.
The moneys in the Retirement Account required for the payment of the
Redemption Price of Class A Notes or Class B Notes to be redeemed or for the
prepayment of Class A Notes or Class B Notes to be prepaid shall be applied by
the Trustee to such payment or prepayment when due without further authorization
or direction.
The moneys in the Retirement Account shall be invested in Investment
Securities as provided in Section 4.11 hereof, and any earnings on or income
from such investment shall be deposited in the Revenue Fund as provided in
Section 4.6 hereof.
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Section 4.8. Surplus Fund. On each Monthly Payment Date the Trustee
shall transfer from the Revenue Fund to (I) the Special Redemption and
Prepayment Account any amounts which are not then required to be transferred
from the Revenue Fund to the Indemnification Fund, the Note Fund, the
Acquisition Fund, the Administration Fund, the Reserve Fund or the Alternative
Loan Guarantee Fund to the extent necessary to increase the Balance in the
Special Redemption and Prepayment Account to equal the aggregate of the Special
Redemption and Prepayment Account Requirements for each series of Notes any Note
of which is then Outstanding, and (II) the Surplus Account any amounts which are
not then required to be transferred from the Revenue Fund to the Indemnification
Fund, the Note Fund, the Acquisition Fund, the Administration Fund, the Reserve
Fund, the Alternative Loan Guarantee Fund or the Special Redemption and
Prepayment Account. The Trustee shall also credit to the Surplus Account the
proceeds of the resale to a Lender or SLFC of any Student Loans previously
purchased with moneys in the Surplus Account pursuant to the repurchase
obligation of the Lender or SLFC under the applicable Student Loan Purchase
Agreement.
Balances in the Surplus Fund shall be applied to the following purposes
in the following order of priority: first, to remedy deficiencies in the
Indemnification Fund to the extent and in the manner provided in Section 4.5
hereof; second, to remedy deficiencies in the Interest Account to the extent and
in the manner provided in Section 4.7.1 hereof for the payment of interest on
Class A Notes or Other Senior Obligations payable therefrom; third, to remedy
deficiencies in the Principal Account to the extent and in the manner provided
in Section 4.7.2 hereof for the payment of Class A Notes at the Stated Maturity
thereof or on a Sinking Fund Payment Date therefor, the purchase price of Class
A Notes on a Purchase Date or Mandatory Tender Date therefor or Other Senior
Obligations payable therefrom; fourth, to remedy deficiencies in the Retirement
Account to the extent and in the manner provided in Section 4.7.3 hereof for the
redemption or payment of Class A Notes or for the payment of Other Senior
Obligations payable therefrom; fifth, to remedy deficiencies in the Interest
Account to the extent and in the manner provided in Section 4.7.1 hereof for the
payment of interest on Class B Notes and Other Subordinate Obligations payable
therefrom; sixth, to remedy deficiencies in the Principal Account to the extent
and in the manner provided in Section 4.7.2 hereof for the payment of Class B
Notes at the Stated Maturity thereof, the purchase price of Class B Notes on a
Purchase Date or Mandatory Tender Date therefor and Other Subordinate
Obligations payable therefrom; seventh, to remedy deficiencies in the Retirement
Account to the extent and in the manner provided in Section 4.7.3 hereof for the
redemption or payment of Class B Notes or for the payment of Other Subordinate
Obligations payable therefrom; eighth, to make deposits to the credit of the
Administration Fund to the extent and in the manner provided in Section 4.3
hereof (provided that such transfers shall only be made from Balances in the
Surplus Account); ninth, to remedy deficiencies in the Reserve Fund to the
extent and in the manner provided in Section 4.4 hereof; tenth, to remedy
deficiencies in the Principal Account to meet the sinking fund installment with
respect to Class B Term Notes on a Sinking Fund Payment Date (other than the
Stated Maturity thereof); eleventh, to make transfers to the credit of the
Retirement Account to redeem or prepay Class A Notes or Class B Notes as
provided in a Supplemental Indenture relating thereto (provided that any such
transfers shall only be made from Balances in the Special Redemption and
Prepayment Account); and twelfth, to make deposits to the credit of the Interest
Account for the payment of Carry-Over Amounts (and accrued interest thereon) to
the extent and in the manner provided in Section 4.7.1 hereof (provided that
such transfers shall only be made
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from Balances in the Surplus Account). Notwithstanding the foregoing, Balances
in the Surplus Fund consisting of Eligible Loans shall not be required to be
applied (1) pursuant to priorities first through seventh in the preceding
sentence until after any transfers from the Reserve Fund have been taken into
account, and (2) in any event pursuant to priorities eighth through twelfth in
the preceding sentence. If the amounts in the Surplus Fund are to be used to
remedy any such deficiency or to make a transfer to the credit of the
Administration Fund or the Retirement Account, transfers shall be made first
from any cash or Investment Securities included in the Surplus Account and the
Special Redemption and Prepayment Account, in that order of priority, and
thereafter from the proceeds of any sale of Student Loans included in the
Surplus Account.
Balances in the Special Redemption and Prepayment Account may also be
transferred to the Acquisition Fund for the acquisition or origination of
Eligible Loans as provided in Section 4.2 hereof and as further authorized or
limited in a Supplemental Indenture. Balances in the Special Redemption and
Prepayment Account shall be transferred to the Acquisition Fund to be so used
upon receipt by the Trustee of a Corporation Request directing such transfer,
accompanied by an Eligible FFELP Loan Acquisition Certificate or an Eligible
FFELP Loan Origination Certificate, in the case of FFELP Loans, or an Eligible
Alternative Loan Acquisition Certificate, in the case of Eligible Alternative
Loans, and all documents, opinions and certificates required thereby, together
with the amount, if any, required by the related Supplemental Indenture to be
received in connection with the acquisition of such Eligible Alternative Loans
for deposit in the Alternative Loan Guarantee Fund.
Subject to Section 10.2 hereof, balances in the Special Redemption and
Prepayment Account (other than any portion thereof to be applied to the
mandatory prepayment of principal of any Notes) may also be transferred to the
Note Fund for the purchase of Notes at a purchase price (including any brokerage
or other charges) not to exceed the greater of the Principal Amount thereof or,
if such purchase occurs during the period when such Notes are subject to
redemption at the option of the Corporation from such funds, the Redemption
Price set forth in the Supplemental Indenture authorizing the issuance of such
Notes that would be applicable to the redemption of Notes pursuant thereto on
the date of such purchase, in either case plus accrued interest, in accordance
with the provisions of Section 10.7 hereof, as determined by the Corporation at
such time, provided that the Trustee shall have first certified that no
deficiencies exist at such time in the Note Fund, the Indemnification Fund or
the Reserve Fund, any such Balances to be so used are not required to be applied
to the prepayment of principal of any Notes and, if the purchase price of any
Note to be so purchased is to exceed the Principal Amount thereof plus accrued
interest thereon, the Trustee shall have been provided with a Corporation
Certificate certifying that, based on a Cash Flow Projection, any such purchase
of Notes will not materially adversely affect the Corporation's ability to pay
Debt Service on the Outstanding Notes, Outstanding Other Obligations, Carry-Over
Amounts (including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the
Indemnification Fund.
Balances in the Surplus Fund may, subject to the last sentence of the
following paragraph, also be applied, as determined by the Corporation from time
to time, to the payment of principal of, premium, if any, or interest on Class C
Notes when due or upon the redemption thereof at the option of the Corporation;
provided that (A) the Trustee shall have certified that no
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deficiencies exist at such time in the Note Fund, the Indemnification Fund or
the Reserve Fund, (B) after taking into account any such payments of interest on
the Class C Notes, the Senior Percentage will not be less than one hundred ten
percent (110%) (or such lower percentage specified in a Corporation Certificate
delivered to the Trustee which, if Unenhanced Class A Notes are Outstanding,
shall not result in the lowering or withdrawal of the outstanding rating
assigned by any Rating Agency to any of the Unenhanced Class A Notes
Outstanding, as evidenced in writing to the Trustee by each such Rating Agency,
or if no Unenhanced Class A Notes are Outstanding but Other Senior Obligations
are Outstanding, is acceptable to the Other Senior Beneficiaries holding such
Other Senior Obligations, as evidenced in writing to the Trustee by each such
Other Senior Beneficiary), and the Subordinate Percentage will not be less than
one hundred percent (100%) (or such lower percentage specified in a Corporation
Certificate delivered to the Trustee which, if Unenhanced Class B Notes are
Outstanding, shall not result in the lowering or withdrawal of the outstanding
rating assigned by any Rating Agency to any of the Unenhanced Class B Notes
Outstanding, as evidenced in writing to the Trustee by each such Rating Agency,
or if no Unenhanced Class B Notes are Outstanding but Other Subordinate
Obligations are Outstanding, is acceptable to the Other Subordinate
Beneficiaries holding such Other Subordinate Obligations, as evidenced in
writing to the Trustee by each such Other Subordinate Beneficiary); and (C)
after taking into account any such payments of principal of or premium, if any,
on the Class C Notes, the Senior Asset Requirement will be met. If the amounts
in the Surplus Fund are to be used to pay principal of, premium or interest on
the Class C Notes in accordance with this paragraph, payments shall be made
first from any cash or Investment Securities in the Surplus Account and the
Special Redemption and Prepayment Account, in that order of priority, then from
the proceeds of any sale of Student Loans in the Surplus Account not
constituting Eligible Loans, and thereafter from the proceeds of any sale of
Eligible Loans in the Surplus Account.
Subject to Section 10.2 hereof, balances in the Surplus Account may
also be applied to any one or more of the following purposes at any time as
determined by the Corporation at such time, provided the Trustee shall have
first certified that no deficiencies exist at such time in the Note Fund, the
Indemnification Fund, the Reserve Fund or the Special Redemption and Prepayment
Account:
(i) transfer to the Retirement Account for the redemption of
Class A Notes or Class B Notes; provided that, if the Redemption Price
of any Note to be so redeemed is to exceed the Principal Amount
thereof, the Trustee shall have received a Corporation Certificate
certifying that any such Balances to be so used are not reasonably
expected to be needed to pay Debt Service on the Outstanding Notes and
Outstanding Other Obligations, Carry-Over Amounts (including accrued
interest thereon) with respect to Outstanding Notes, Administrative
Expenses or Note Fees or to make required transfers to the
Indemnification Fund;
(ii) transfer to the Principal Account or the Retirement
Account for the purchase of Class A Notes or Class B Notes at a
purchase price (including any brokerage or other charge) not to exceed
the greater of the Principal Amount thereof or, if such purchase occurs
during the period when such Notes are subject to redemption at the
option of the Corporation from such funds, the Redemption Price set
forth in the Supplemental
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Indenture authorizing the issuance of such Notes that would be
applicable to the redemption of Notes pursuant thereto on the date of
such purchase, in either case plus accrued interest, in accordance with
the provisions of Section 10.7 hereof, provided that, if the purchase
price of any Note to be so purchased is to exceed the Principal Amount
thereof plus accrued interest thereon, the Trustee shall have first
received a Corporation Certificate certifying that, based on a Cash
Flow Projection, any such purchase of Notes will not materially
adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to
the Indemnification Fund; or
(iii) upon the receipt by the Trustee of a Corporation
Certificate that the Balance in the Administration Fund is at least
equal to the Budgeted Administrative Expenses and Note Fees for the
next succeeding ninety (90) days, and that, based on a Cash Flow
Projection, any moneys to be so used are not reasonably expected to be
needed for the payment of Debt Service on the Outstanding Notes and
Outstanding Other Obligations, Carry-Over Amounts (including accrued
interest thereon) with respect to Outstanding Notes, Administrative
Expenses or Note Fees or for transfer to the Indemnification Fund: (a)
the acquisition of Student Loans meeting the requirements of clauses
(A)(1) and (A)(2) or (B) of the definition of "Eligible Loan" in
Section 1.1 hereof, the moneys to be applied from the Surplus Account
for such purpose being no more than the Principal Balance of such
Student Loans, plus accrued noncapitalized interest thereon payable by
the Eligible Borrower, if any, to the date of purchase, reasonable
transfer, origination and assignment fees, if applicable, and a premium
not to exceed that assumed in the most recent Cash Flow Projection
delivered in conjunction with the issuance of a series of Notes [or
such greater premium the payment of which will not materially adversely
affect the Corporation's ability to pay Debt Service on the Outstanding
Notes, Other Indenture Obligations, Carry-Over Amounts (including
accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required transfers to
the Indemnification Fund, as shown in a subsequent Cash Flow Projection
received by the Trustee, and which will not result in the lowering or
withdrawal of the outstanding rating assigned by any Rating Agency to
any of the Unenhanced Senior or Subordinate Notes Outstanding, as
evidenced in writing to the Trustee by each such Rating Agency], and
being paid to the Lender or SLFC upon the receipt by the Trustee of a
Student Loan Acquisition Certificate and all documents, opinions,
certifications and amounts required thereby (including, in the case of
an Alternative Loan, (i) the original promissory note relating thereto
and all endorsements thereof required by the related Student Loan
Purchase Agreement, and (ii) the amount, if any, required by the
related Supplemental Indenture to be deposited in the Alternative Loan
Guarantee Fund in connection with such acquisition), or to a Transferor
upon the receipt by the Trustee of a all documents, opinions and
certifications required by the related Transfer Agreement (including,
in the case of an Alternative Loan, (i) the original promissory note
relating thereto and all endorsements thereof required by the Transfer
Agreement, and (ii) the amount, if any, required by the related
Supplemental Indenture to be received in connection with such
acquisition for deposit in the Alternative Loan Guarantee Fund); (b) to
reimburse another fund, account or other source of the Corporation for
the previous payment of Costs of
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Issuance, to the extent not previously reimbursed from the Surplus
Account; and (c) for such other purposes as the Corporation shall
determine upon receipt by the Trustee of an opinion of Counsel that
such use will not violate any covenants of the Corporation contained in
Section 5.16 hereof, is authorized by the Corporation's Articles of
Incorporation and Bylaws; provided, however, that Balances in the
Surplus Account shall not be applied to any of the purposes specified
in the preceding clauses (iii)(b) or (c) or to the purchase of Student
Loans that are not Eligible Loans unless, after taking into account any
such application and excluding, for these purposes only, from the
calculation of Aggregate Value, any Financed Student Loans which are
not Eligible Loans and any moneys reasonably expected to be needed for
transfer to the Indemnification Fund or to be used to pay Costs of
Issuance, Note Fees or Administrative Expenses, (1) the Senior
Percentage will not be less than one hundred twelve percent (112%) (or
such lower percentage specified in a Corporation Certificate delivered
to the Trustee which, if Unenhanced Class A Notes are Outstanding,
shall not result in the lowering or withdrawal of the outstanding
rating assigned by any Rating Agency to any of the Unenhanced Class A
Notes Outstanding, as evidenced in writing to the Trustee by each such
Rating Agency, or if no Unenhanced Class A Notes are Outstanding but
Other Senior Obligations are Outstanding, is acceptable to the Other
Senior Beneficiaries holding such Outstanding Other Senior Obligations,
as evidenced in writing to the Trustee by each such Other Senior
Beneficiary), and (2) the Subordinate Percentage will not be less than
one hundred two percent (102%) (or such lower percentage specified in a
Corporation Certificate delivered to the Trustee which, if Unenhanced
Class B Notes are Outstanding, shall not result in the lowering or
withdrawal of the outstanding rating assigned by any Rating Agency to
any of the Unenhanced Class B Notes Outstanding, as evidenced in
writing to the Trustee by each such Rating Agency, or if no Unenhanced
Class B Notes are Outstanding but Other Subordinate Obligations are
Outstanding, is acceptable to the Other Subordinate Beneficiaries
holding such Outstanding Other Subordinate Obligations, as evidenced in
writing to the Trustee by each such Other Subordinate Beneficiary); and
provided, further, that Balances in the Surplus Account may, to the
extent provided in a Supplemental Indenture, be applied to the purchase
of Eligible Loans as specified in the preceding clause (iii)(a) without
satisfying any other condition of this clause (iii).
The unpaid principal balance of Student Loans Financed with moneys in
the Surplus Account shall be included in the Balance of the Surplus Account
until such Financed Student Loans shall have been paid in full or sold as
hereinafter provided; provided that, to the extent provided in a Supplemental
Indenture, any such Student Loans so Financed and constituting Eligible Loans
shall, upon the financing thereof, be credited to, and included in the Balance
of, the Acquisition Fund and shall thereafter not be deemed to have been
Financed with moneys in the Surplus Account. Interest and principal payments,
including Guarantee payments and similar payments made by any other Person, and
Special Allowance Payments (excluding any federal interest subsidy payments and
Special Allowance Payments that accrued prior to the date on which such Student
Loans were Financed) received with respect to Student Loans Financed with moneys
in the Surplus Account shall be credited to the Revenue Fund as provided in
Section 4.6 hereof.
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The Trustee shall use its best efforts to sell Student Loans included
in the Balance of the Surplus Account at the best price available to the extent
necessary to make any transfer or payment therefrom as provided in the second
paragraph of this Section 4.8. In addition, the Corporation may, at any time,
sell to any purchaser (A) one or more Eligible Loans Financed with moneys in the
Surplus Account at a price not less than one hundred percent (100%) of the
Principal Balance thereof plus accrued noncapitalized interest thereon payable
by the Eligible Borrower, or (B) one or more Student Loans Financed with moneys
in the Surplus Account that are not Eligible Loans at a price not less than the
lesser of one hundred percent (100%) of the Principal Balance thereof or the
percentage of the Principal Balance thereof paid to finance such Student Loan
plus, in either case, accrued noncapitalized interest thereon payable by the
Eligible Borrower.
Student Loans from time to time held in the Surplus Account may also be
purchased at any time with the proceeds of the Corporation's bonds, notes or
other evidences of indebtedness, at a purchase price equal to one hundred
percent (100%) of the Principal Balance of the Student Loans so purchased plus
accrued noncapitalized interest thereon payable by the Eligible Borrower, if
any.
Any money received by the Corporation in connection with a sale of
Financed Student Loans pursuant to the preceding two (2) paragraphs shall be
deposited to the credit of the Surplus Account.
Pending transfers from the Surplus Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from such investments shall be deposited in the Revenue
Fund as provided in Section 4.6 hereof.
Section 4.9. Alternative Loan Guarantee Fund. The Trustee will, upon
the purchase of each Alternative Loan from a Transferor or SLFC, deposit to the
credit of the Alternative Loan Guarantee Fund the amount, if any, specified in
the related Supplemental Indenture. The Trustee will also deposit to the
Alternative Loan Guarantee Fund any amounts transferred thereto from the Revenue
Fund.
To the extent, as of the end of any calendar month, any payment on a
Financed Alternative Loan has not been received within 180 days after the due
date therefor, such Financed Alternative Loan will be deemed a Liquidated
Alternative Loan. The Trustee will, on each Monthly Payment Date, transfer from
the Alternative Loan Guarantee Fund to the Revenue Fund an amount equal to the
Principal Balance of and accrued interest on each Financed Alternative Loan that
became a Liquidated Alternative Loan during the preceding calendar month.
If on any Monthly Payment Date the Balance in the Alternative Loan
Guarantee Fund exceeds the Principal Balance of Alternative Loans held under
this Indenture, the Trustee shall transfer to the Revenue Fund an amount equal
to such excess.
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Pending transfers from the Alternative Loan Guarantee Fund, the moneys
therein shall be invested in Investment Securities as provided in Section 4.11
hereof, and any earnings on or income from such investments shall be retained
therein.
Section 4.10. Pledge. The Notes, including the principal thereof,
premium, if any, and interest thereon and any Carry-Over Amounts (and accrued
interest thereon) with respect thereto, and Other Obligations shall be limited
obligations of the Corporation specifically secured as provided in the Granting
Clauses hereof. Financed Student Loans purchased with the proceeds of the
Corporation's bonds, notes or other obligations as described in Section 4.8
hereof, or resold to a Lender or SLFC pursuant to its repurchase obligation
under a Student Loan Purchase Agreement, or sold or exchanged for Eligible Loans
in accordance with the provisions of Section 4.2 or Section 4.8 hereof, shall,
contemporaneously with receipt by the Trustee of the purchase price thereof in
freely transferable funds, including any Eligible Loans to be received in
exchange therefor, no longer be pledged to nor serve as security for the
principal of, premium, if any, and interest on and any Carry-Over Amounts (and
accrued interest thereon) with respect to the Notes or any Other Obligations.
The Corporation pledges and agrees with the Beneficiaries that the
Corporation will not limit or alter its powers to fulfill the terms of any
agreements made in this Indenture or in any Notes or in any way impair the
rights and remedies of the Beneficiaries until the Notes, together with interest
thereon, including interest on any unpaid installments of interest, and all
costs and expenses in connection with any action or proceeding by or on behalf
of the Holders and all amounts owing to Other Beneficiaries, are fully met and
discharged.
The Notes, including the principal thereof, premium, if any, and
interest thereon and any Carry-Over Amounts (and accrued interest thereon) with
respect thereto, and any Other Obligations shall be secured hereunder by the
foregoing pledge of the Financed Student Loans, revenues, securities and other
moneys hereby made, and by a lien thereon, subject to the priorities expressly
provided in Section 3.12 or elsewhere herein. The pledge in the Granting Clauses
hereof shall constitute a prior and paramount lien and charge on such Financed
Student Loans, revenues, contract rights, securities and other moneys from time
to time held hereunder (subject only to the valid exercise of the constitutional
powers of the United States of America, valid bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights, and to
the provisions of this Indenture permitting the application of such Financed
Student Loans, revenues, securities and other moneys for the purposes and on the
terms and conditions hereof), over and ahead of any claims (whether in tort,
contract or otherwise irrespective of whether the parties possessing such claims
have notice of the foregoing pledges or charges), encumbrances or obligations of
any nature hereafter arising or incurred, and over and ahead of all other
indebtedness payable from or secured by such revenues which may hereafter be
created or incurred. The pledge of such Financed Student Loans, revenues,
securities and other moneys made herein and hereby shall be valid and binding
from the time of the delivery of and payment for the first series of Notes
issued hereunder, and such Financed Student Loans, revenues, securities and
other moneys shall thereupon be immediately subject to the lien, pledge and
charge hereof upon receipt thereof by the Corporation, SLFC or any Lender,
Transferor, Servicer, Trustee, Paying Agent, Deposit Agent, Remarketing Agent,
Depositary, Auction Agent or
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Broker-Dealer, or any agent thereof, without any physical delivery or
segregation thereof or further act.
No Beneficiary shall be required to see that the moneys derived from
any Note are applied to the purpose or purposes for which the Note is issued.
The validity of the Notes shall neither be dependent upon nor affected by the
validity or regularity of any proceedings or contracts relating to the Program,
nor the use and application of the proceeds of such Notes.
The pledge of the Financed Student Loans, revenues, securities and
other moneys made hereby includes the pledge of any contract or any evidence of
indebtedness or other rights of the Corporation to receive any of the same,
whether now existing or hereafter coming into existence, and whether now or
hereafter acquired, and the proceeds thereof.
Section 4.11. Investments. Moneys held by the Trustee or any Deposit
Agent for the credit of any Fund or Account shall be invested by the Trustee or
such Deposit Agent, in accordance with the Sections hereof relating to such
Funds and Accounts, as directed by the Corporation, to the fullest extent
practicable and reasonable, in Investment Securities which shall mature or be
redeemable at no less than the Value of Investment Securities thereof at the
option of the holder prior to the respective dates when the moneys held for the
credit of such Fund or Account will be required for the purposes intended.
Subject to the right of the Corporation to direct the investment of
funds hereunder, moneys in any Fund or Account or any combination of Funds and
Accounts shall be continuously invested and reinvested or deposited and
redeposited by the Trustee or any Deposit Agent in the highest yield Investment
Securities reasonably known to the Trustee or such Deposit Agent, with a view
toward maximizing yield (with proper preservation of principal) and minimizing
the instances of uninvested funds. The Investment Securities purchased shall be
held by the Trustee or any Deposit Agent and shall be deemed at all times to be
part of such Fund or Account or combination thereof, and the Trustee or any
Deposit Agent shall inform the Corporation of the details of all such
investments. The Trustee or any Deposit Agent shall sell at the best price
obtainable, or present for redemption, any Investment Securities purchased by it
as an investment whenever it shall be necessary to provide moneys to meet any
payment from such Fund or Account. The Trustee may purchase from or sell to
itself or an affiliate, as principal or agent, any Investment Securities. The
Trustee or any Deposit Agent shall advise the Corporation in writing, on or
before the fifth day of each calendar month, of all investments held for the
credit of each Fund or Account in its custody under the provisions of this
Indenture as of the end of the preceding month.
Any investment of funds in Investment Securities shall be held by a
financial institution in accordance with the following requirements:
(i) all Investment Securities shall be held in an account with
such financial institution in the name of the Trustee;
(ii) all Investment Securities held in such account shall be
delivered to the Trustee in the following manner:
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(A) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the UCC (other than certificated
securities) and are susceptible of physical delivery,
transferred to the Trustee by physical delivery to the
Trustee, indorsed to, or registered in the name of, the
Trustee or its nominee or indorsed in blank; or such
additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of
any such Investment Securities to the Trustee free of any
adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(B) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transferred:
(1) by physical delivery of such
certificated security to the Trustee, provided that
if the certificated security is in registered form,
it shall be indorsed to, or registered in the name
of, the Trustee or indorsed in blank;
(2) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section 8-
102(a)(14) of the UCC) acting on behalf of the
Trustee if the certificated security has been
specially indorsed to the Trustee by an effective
indorsement;
(C) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book entry regulations, 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 property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a
securities intermediary which is also a "depositary" pursuant
to applicable federal regulations and issuance by such
securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of
the purchase by the securities intermediary on behalf of the
Trustee of such book-entry security; the making by such
securities 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 Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent
for the Trustee; or such additional or alternative procedures
as may hereafter become appropriate to effect complete
transfer of ownership of any such Investment Securities to the
Trustee free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(D) with respect to any "uncertificated security" (as
defined in Section 8-102(a)(18) of the UCC) that is not
governed by clause (C) above, transferred:
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(1)(A) by registration to the Trustee as the
registered owner thereof, on the books and records of
the issuer thereof, or
(B) by registration to another Person (not a
securities intermediary) that either becomes the
registered owner of the uncertificated security on
behalf of the Trustee or, having become the
registered owner, acknowledges that it holds for the
Trustee; or
(2) by the issuer thereof having agreed that
it will comply with instructions originated by the
Trustee without further consent of the registered
owner thereof;
(E) with respect to any "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary
(A) indicates by book entry that a
"financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to
the Trustee's "securities account" (as
defined in Section 8-501(a) of the UCC),
(B) receives a financial asset (as
so defined) from the Trustee or acquires a
financial asset for the Trustee, and, in
either case, accepts it for credit to the
Trustee's securities account (as so
defined),
(C) becomes obligated under other
law, regulation or rule to credit a
financial asset to the Trustee's securities
account, or
(D) has agreed that it will comply
with "entitlement orders" (as defined in
Section 8-102(a)(8) of the UCC) originated
by the Trustee, without further consent by
the "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC), and
(2) such financial asset either is such
Investment Security or a security entitlement
evidencing a claim thereto; and
(F) in each case of delivery contemplated pursuant to
clauses (A) through (E) above, the Trustee shall make
appropriate notations on its records, and shall cause the same
to be made on the records of its nominees, indicating that
such Investment Security is held in trust pursuant to and as
provided in this Indenture.
Any cash held by the Trustee shall be considered a "financial asset" for
purposes of this paragraph. Subject to the other provisions hereof, the Trustee
shall have sole control over each
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such investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the
Trustee or its agent, together with each document of transfer, if any, necessary
to transfer title to such investment to the Trustee in a manner which complies
with this paragraph.
The Trustee agrees that it has no security interest or other adverse
claim to the Funds and Accounts or the Investment Securities therein that are
part of the Trust Estate other than pursuant to this Indenture and that it will
not enter into any agreement that would give any Person or entity other than the
Trustee the right to give entitlement orders with respect to such Investment
Securities or the Funds and Accounts.
Section 4.12. Transfer of Investment Securities. Whenever any transfer
is required by this Indenture to be made from any Fund or Account to any other
Fund or Account, the Trustee may use Investment Securities, or allocable
portions thereof, included in the Balance of the former to the extent necessary
to make such transfer, but only to the extent such Investment Securities are
permissible investments for the Fund or Account to which they are to be
transferred. The amount of any such transfer of Investment Securities shall be
the Value of Investment Securities determined with respect thereto as of the
date of transfer.
Section 4.13. Termination. When no Notes remain Outstanding and no
Other Obligations are Outstanding, the Trustee and any Deposit Agents shall
transfer to the Corporation, or to the order of the Corporation, the Balances in
all Funds and Accounts if, and to the extent that, such Balances are in excess
of amounts needed to pay principal of, premium, if any, and interest on, and any
Carry-Over Amounts (and accrued interest thereon) due and payable with respect
to the Notes, to make all payments to the United States Treasury or otherwise
required by Section 4.5 hereof, and to pay the fees, compensation and expenses
of the Trustee and any Authenticating Agent, Note Registrar, Remarketing Agents,
Depositaries, Auction Agents, Broker-Dealers, Deposit Agents and Paying Agents.
To the extent that such Balances are needed to pay such amounts or fees, the
Trustee shall retain such Balances hereunder and pay such amounts or fees to the
Persons to whom such amounts are due and payable as provided hereunder. In the
event that any portion or all of the Balances in the Funds and Accounts payable
to the Corporation pursuant to this Section consist of Investment Securities
which are payable solely to the Trustee and cannot be effectively transferred to
the Corporation, the Trustee shall continue to hold such Investment Securities
under this Indenture on behalf of the Corporation until such time as such
securities can be transferred to the Corporation or amounts payable thereunder
received, whether by acceleration at the option of the holder thereof, at
maturity or otherwise, all at the direction of an Authorized Officer of the
Corporation.
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ARTICLE FIVE
COVENANTS TO SECURE NOTES; REPRESENTATIONS AND WARRANTIES
Section 5.1. Trustee to Hold Financed Student Loans. The Corporation
shall cause all Financed Student Loans to be endorsed and otherwise conveyed to
the Trustee on behalf of the Corporation (i) in the case of Financed Student
Loans to be acquired pursuant to Student Loan Purchase Agreements, in accordance
with the provisions of the applicable Student Loan Purchase Agreement, (ii) in
the case of Financed Student Loans to be acquired pursuant to a Transfer
Agreement, in accordance with the provisions of such Transfer Agreement, and
(iii) in the case of Financed Student Loans previously acquired with proceeds of
other bonds or notes of the Corporation which are acquired from either the
trustee for such bonds or notes or the Corporation, in accordance with the
provisions of the applicable assignment or other transfer document. In the case
of any origination of Financed Student Loans, the Corporation shall cause such
Student Loans to be originated in the name of the Trustee. The Trustee shall be
the legal owner of all Financed Student Loans for all purposes of the Higher
Education Act, each Alternative Loan Program and each Guarantee Program. The
Trustee shall so hold such Financed Student Loans in its capacity as trustee of
an express trust created pursuant to this Indenture and, in such capacity, shall
be acting on behalf of the Corporation, as the beneficial owner of such Student
Loans, as well as the Holders of the Notes and all Other Beneficiaries, as their
interests may appear.
Section 5.2. Credit Enhancement Facilities, Demand Purchase Agreements
and Swap Agreements. The Corporation may from time to time enter into or obtain
the benefit of any Credit Enhancement Facility, any Demand Purchase Agreement or
any Swap Agreement with respect to any Class A Notes or Class B Notes of any
series; provided that (i) a Supplemental Indenture is entered into in accordance
with the provisions of Section 8.01(i) hereof, and (ii) any such Credit
Enhancement Facility, Demand Purchase Agreement or Swap Agreement satisfies any
conditions specified in a prior Supplemental Indenture.
No Supplemental Indenture shall authorize the execution of a Swap
Agreement unless, as of the date the Corporation enters into such Swap
Agreement, either the Swap Counterparty or the Person executing a Swap
Counterparty Guarantee relating thereto has outstanding obligations rated by
each Rating Agency not lower than in its third highest Specific Rating Category
(or each Rating Agency has a comparable other rating with respect to such Swap
Counterparty Guarantee, such as a comparable rating of claims paying ability or
deposits) and no such Swap Agreement shall be designated as a Senior Swap
Agreement unless, as of the date the Corporation enters into such Swap
Agreement, the Senior Asset Requirement will be met and, if Unenhanced Notes are
Outstanding, the Trustee shall have received written confirmation from each
Rating Agency that the execution and delivery of the Swap Agreement will not
cause the reduction or withdrawal of any rating or ratings then applicable to
any Unenhanced Notes.
Notwithstanding anything in this Indenture to the contrary, (1) any
Supplemental Indenture authorizing the execution by the Corporation of a Senior
Swap Agreement, Subordinate Swap Agreement, Senior Credit Enhancement Facility,
Subordinate Credit Enhancement Facility, Senior Demand Purchase Agreement or
Subordinate Demand Purchase
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Agreement may include provisions with respect to the application and use of all
amounts to be paid thereunder, (2) no amounts paid under any such Credit
Enhancement Facility or Demand Purchase Agreement shall be part of the Trust
Estate except to the extent, if any, specifically provided in such Supplemental
Indenture and no Beneficiaries shall have any rights with respect to any such
amounts so paid except as may be specifically provided in such Supplemental
Indenture, (3) Notes of one or more series or any portions thereof may be
secured by a pledge of any or all amounts payable pursuant to such Credit
Enhancement Facility or Demand Purchase Agreement, in the manner and to the
extent provided in such Supplemental Indenture, and such Notes may be either
Class A Notes or Class B Notes for purposes hereof, and (4) the Corporation's
obligations under any such Credit Enhancement Facility, Demand Purchase
Agreement or Swap Agreement shall be limited obligations, payable solely from
the revenues and assets of the Corporation pledged therefor under this
Indenture.
Section 5.3. Enforcement and Amendment of Guarantee Agreements. So long
as any Notes or Other Obligations are Outstanding and Financed Eligible Loans
are Guaranteed by a Guarantee Agency, the Corporation (a) will, from and after
the date on which the Trustee on its behalf shall have either entered into, or
succeeded to the rights and interests of any Lender under, any Guarantee
Agreement covering Financed Eligible Loans, cause the Trustee to maintain such
Guarantee Agreement and diligently enforce the Trustee's rights thereunder; (b)
will cause the Trustee to enter into such other similar or supplemental
agreements as shall be required to maintain benefits for all Financed Eligible
Loans covered thereby, and (c) will not voluntarily consent to or permit any
rescission of or consent to any amendment to or otherwise take any action under
or in connection with any such Guarantee Agreement or any similar or
supplemental agreement which in any manner will materially adversely affect the
rights of the Holders from time to time of the Notes or Other Beneficiaries
hereunder.
Section 5.4. Trustee to Hold Alternative Loan Notes. The Trustee shall
hold the original of each promissory note delivered in connection with the
acquisition of each Financed Alternative Loan. The Trustee shall not release
custody of any such promissory note except upon the sale thereof or to the
Servicer as necessary in connection with the servicing of the related Financed
Alternative Loan under the Servicing Agreement. Any such promissory note so
released to the custody of the Servicer shall, except in the case of the
liquidation thereof, be promptly returned to the Trustee. The Trustee shall
maintain a record of all such promissory notes held by the Trustee and any
releases thereof to the custody of the Servicer.
Section 5.5. Acquisition, Collection and Assignment of Student Loans.
The Corporation shall, except as provided in Section 4.8 with regard to the
Surplus Fund, cause the Trustee to originate or acquire only Eligible Loans with
moneys in any of the Funds and shall diligently cause to be collected all
principal and interest payments (subject to any adjustments described in Section
5.6 hereof) on all the Financed Student Loans and, subject to the following
proviso, all Non-Delivery Fees and other sums to which the Corporation is
entitled pursuant to any Student Loan Purchase Agreement, and all grants,
subsidies, donations, insurance payments, Special Allowance Payments and all
defaulted payments Guaranteed by any Guarantee Agency which relate to such
Financed Student Loans; provided that the Corporation may, in its discretion,
waive its right to receive any portion or all of the Non-Delivery Fees to which
the Corporation is otherwise entitled under the Student Loan Purchase
Agreements, as evidenced by
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a Corporation Certificate to that effect. The Corporation shall also make, or
cause to be made by Lenders or Servicers, every effort to perfect the
Corporation's, the Trustee's or such Lender's or Servicer's claims for payment
from the Secretary of Education or a Guarantee Agency, as soon as possible, of
all payments related to Financed FFELP Loans. The Corporation will cause the
Trustee to assign such Financed FFELP Loans for payment of guarantee or
insurance benefits within the time required under applicable law and
regulations. The Corporation shall cause all United States and applicable state
statutes, rules and regulations which apply to the Program and to Financed
Student Loans to be complied with.
Section 5.6. Enforcement of Financed Student Loans. The Corporation
shall cause to be diligently enforced, and shall cause to be taken all steps,
actions and proceedings reasonably necessary for the enforcement of, all terms,
covenants and conditions of all Financed Student Loans and agreements in
connection therewith, including the prompt payment of all principal and interest
payments (as such payments may be adjusted to take into account (i) any discount
the Corporation may cause to be made available to borrowers who make payments on
Financed Student Loans through automatic withdrawals, and (ii) any reduction in
the interest payable on Financed Student Loans provided for in any special
program under which such loans were originated) and all other amounts due the
Trustee thereunder. The Corporation shall not permit the release of the
obligations of any borrower under any Financed Student Loan and shall at all
times, to the extent permitted by law, cause to be defended, enforced, preserved
and protected the rights and privileges of the Corporation, the Trustee and the
Beneficiaries under or with respect to each Financed Student Loan and agreement
in connection therewith. The Corporation shall not consent or agree to or permit
any amendment or modification of any Financed Student Loan or agreement in
connection therewith which will in any manner materially adversely affect the
rights or security of the Beneficiaries. Nothing in this Section 5.6 or in
Sections 5.5 and 5.7 hereof shall be construed to prevent the Corporation from
settling a default or curing a delinquency on any Financed Student Loan on such
terms as shall be required by law. Notwithstanding the foregoing, the (1) the
Corporation may cause the Trustee to forgive the remaining indebtedness on any
Financed Student Loan having a principal balance not in excess of $100 if, in
the reasonable judgment of the Corporation evidenced by a Corporation
Certificate delivered to the Trustee, the cost of collection of the remaining
indebtedness of such Financed Student Loan would exceed such remaining
indebtedness, and (2) Corporation may amend the terms of a Financed Student Loan
to provide for a different rate of interest thereon to the extent required by
law or, if such Financed Student Loan is a Plus or SLS Loan, to effect a
reissuance of such Plus or SLS Loan at a variable rate.
Section 5.7. Servicing and Other Agreements. The Corporation 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
Trustee in a Corporation Certificate shall be deemed to be action taken by the
Corporation. The Corporation shall enter into a Servicing Agreement providing
for the servicing of the Financed Student Loans and performance of certain of
its other obligations under this Indenture, including, without limitation, those
obligations described in this Section and Sections 5.5, 5.6 and 5.8 hereof.
The Corporation shall cause to be diligently enforced and taken all
reasonable steps, actions and proceedings necessary for the enforcement of all
terms, covenants and
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conditions of all Servicing Agreements, including the prompt payment of all
principal and interest payments and all other amounts due the Corporation or the
Trustee thereunder, including all grants, subsidies, donations, Special
Allowance Payments and all defaulted payments Guaranteed by any Guarantee Agency
which relate to any Financed Student Loans. The Corporation shall not permit the
release of the obligations of any Servicer under any Servicing Agreement and
shall at all times, to the extent permitted by law, cause to be defended,
enforced, preserved and protected the rights and privileges of the Corporation,
the Trustee and the Beneficiaries under or with respect to each Servicing
Agreement. The Corporation shall not consent or agree to or permit any amendment
or modification of any Servicing Agreement which will in any manner materially
adversely affect the rights or security of the Beneficiaries.
Any Servicing Agreement shall require the Servicer to administer and
collect all Financed Student Loans in the manner provided in this Section 5.7
and Section 5.8 hereof, and shall require the Servicer to prepare and furnish to
the Trustee, no later than the twenty-fifth day (or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day) of each calendar month a
Monthly Servicing Report with respect to the previous calendar month. Any
Servicer may perform all or part of its servicing or other activities under the
Servicing Agreement through a subcontractor. Any Servicer shall perform or shall
cause its subcontractor to perform all services under the Servicing Agreement in
compliance with the Higher Education Act, applicable requirements of each
Guarantee Agency and each Alternative Loan Program and all other applicable
federal, state and local laws and regulations. Each Servicer shall be
responsible for the performance of its obligations under the Servicing
Agreement, whether such obligations are performed by such Servicer or by its
subcontractor, and such Servicer shall be responsible for any fees and payments
required by the subcontractor.
Section 5.8. Administration and Collection of Financed Student Loans.
All Financed Student Loans shall be administered and collected by a Servicer
selected by the Corporation in a competent, diligent and orderly fashion and in
accordance with all requirements of the Higher Education Act, the Secretary of
Education, this Indenture, the Federal Reimbursement Contracts, each Alternative
Loan Program, each Guarantee Program and each Guarantee Agreement.
Section 5.9. Books of Account; Annual Audit. The Corporation shall
cause to be kept and maintained proper books of account relating to the Program
in which full, true and correct entries will be made, in accordance with
generally accepted accounting principles, of all dealings or transactions of or
in relation to the business and affairs of the Corporation, and within one
hundred twenty (120) days after the end of each Fiscal Year shall cause such
books of account to be audited by an Accountant. A copy of each audit report,
annual balance sheet and income and expense statement showing in reasonable
detail the financial condition of the Corporation as at the close of each Fiscal
Year, and summarizing in reasonable detail the income and expenses for such
year, including the transactions relating to the Funds and Accounts, shall be
filed promptly with the Trustee and shall be available for inspection by any
Noteholder or Other Beneficiary.
Section 5.10. Punctual Payments. The Corporation shall duly and
punctually pay, or cause to be paid, the principal of, premium, if any, and
interest on and any Carry-Over
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Amount (and accrued interest thereon) due and payable with respect to each and
every Note and each Other Obligation from the revenues and other assets pledged
hereunder on the dates and at the places, and in the manner provided, in the
Notes and with respect to each Other Obligation according to the true intent and
meaning thereof, and the Corporation shall faithfully do and perform and at all
times fully observe and keep any and all of its covenants, undertakings,
stipulations and provisions contained in the Notes, the Other Obligations and in
this Indenture.
Section 5.11. Further Assurances. The Corporation shall at any and all
times, insofar as it may be authorized so to do, pass, make, do, execute,
acknowledge and deliver all and every such further resolutions, indentures,
acts, deeds, conveyances, assignments, transfers and assurances as may be
necessary or desirable for the better assuring, conveying, granting, assigning
and confirming any and all of the rights, revenues, securities and other moneys
hereby pledged or charged with or assigned to the payment of the Notes, any Swap
Agreement, Credit Enhancement Facility or Demand Purchase Agreement or intended
so to be, or which the Corporation may hereafter become bound to pledge or
charge or assign.
Section 5.12. Protection of Security; Power To Issue Notes and Pledge
Revenues and Other Funds. The Corporation is duly authorized under all
applicable law to create and issue the Notes, to enter into this Indenture, to
enter into Other Obligations and to pledge the revenues and other moneys,
Financed Student Loans, securities, properties, rights, interests and evidences
of indebtedness purported to be pledged by this Indenture in the manner and to
the extent provided in this Indenture. The revenues and other moneys,
securities, evidences of indebtedness and properties so pledged are and will be
free and clear of any pledge, lien, charge or encumbrance thereon or with
respect thereto prior to, or of equal rank with, the pledge created by this
Indenture, except as otherwise expressly provided herein, and all action on the
part of the Corporation to that end has been duly and validly taken. The Notes
and the provisions of this Indenture, each Supplemental Indenture and each Other
Obligation are and will be valid and legally enforceable obligations of the
Corporation in accordance with their terms and the terms of this Indenture and
each Supplemental Indenture. The Corporation shall at all times, to the extent
permitted by law, defend, preserve and protect the pledge of the revenues and
other moneys, Financed Student Loans, securities, properties, rights, interests
and evidences of indebtedness pledged under this Indenture and each Supplemental
Indenture and all the rights of the Beneficiaries hereto against all claims and
demands of all Persons whomsoever.
The pledge of the revenues and other moneys, Financed Student Loans,
securities, properties, rights, interests and evidences of indebtedness made
hereby includes the pledge of any contract or any evidence of indebtedness or
other rights of the Corporation to receive any of the same, whether now existing
or hereafter coming into existence, and whether now or hereafter acquired, and
the proceeds thereof.
In consideration of the purchase and acceptance of the Notes by those
who shall hold the same from time to time and the execution and delivery by
Other Beneficiaries of any Other Obligations, the provisions of this Indenture
shall be a part of the contract of the Corporation with the Beneficiaries and
shall be deemed to be and shall constitute a contract between the Corporation,
the Trustee and the Beneficiaries.
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Section 5.13. No Encumbrances. The Corporation will not create, or
permit the creation of, any pledge, lien, charge or encumbrance upon the
Financed Student Loans or the revenues and other moneys, securities, properties,
rights, interests and evidences of indebtedness pledged under this Indenture,
except only as to a lien subordinate to the lien of this Indenture created by
any other indenture authorizing the issuance of bonds, notes or other evidences
of indebtedness of the Corporation the proceeds of which have been or will be
used to refund or otherwise retire all or a portion of the Outstanding Notes
(but only upon receipt by the Trustee of an opinion of Counsel that the creation
of such lien will not be prejudicial to the Trustee or the Holders of any
Outstanding Notes or any Other Beneficiary) or as otherwise provided in or
permitted by this Indenture. The Corporation will not issue any bonds or other
evidences of indebtedness, other than the Notes as permitted by this Indenture
and other than Swap Agreements, Credit Enhancement Facilities and Demand
Purchase Agreements relating to Notes as permitted by this Indenture, secured by
a pledge of the revenues and other moneys, securities, properties, rights,
interests and evidences of indebtedness herein pledged or held aside by the
Corporation or by a fiduciary under this Indenture, creating a lien or charge on
such revenues and other moneys, securities, properties, rights, interests and
evidences of indebtedness equal or superior to the lien of this Indenture;
provided that nothing in this Indenture shall prevent the Corporation from
issuing obligations secured by assets and revenues of the Corporation other than
the revenues and other moneys, securities, properties, rights, interests and
evidences of indebtedness pledged in this Indenture.
Section 5.14. Use of Trustee Eligible Lender Number. The Trustee
covenants and agrees not to hold any other FFELP Loans under the federal
eligible lender number under which it holds any Financed FFELP Loans without (1)
the express written consent of the Corporation and SLFC, and (2) having caused
the beneficial owner of any such student loans (and any other appropriate
Persons) to have entered into an agreement with the Corporation and the Trustee,
whereby the Corporation and such other beneficial owner covenant to indemnify
each other in respect of federal interest subsidies, Special Allowance Payments,
Guarantee payments or any other payments by a Guarantee Agency (a) received by
the Trustee on their behalf, (b) later determined by the Secretary of Education
or a Guarantee Agency to have been incorrectly or inappropriately paid to the
Trustee, and (c) for which the Secretary of Education or a Guarantee Agency
reimburses itself, in whole or in part, by withholding payments to the Trustee,
or otherwise seeks reimbursement from the Trustee, with respect to student loans
held by the Trustee on behalf of the other party.
Section 5.15. Limitation on Administrative Expenses and Note Fees. The
Corporation covenants and agrees that the Administrative Expenses and Note Fees
will not, in any Fiscal Year, exceed those that are reasonable and necessary in
light of all circumstances then existing and will not, in any event, be in such
amounts as will materially adversely affect the ability of the Corporation to
pay or perform, as the case may be, all of its obligations under this Indenture
or the security of any Beneficiaries.
Section 5.16. Continuing Existence; Merger and Consolidation. The
Corporation will maintain its existence as a corporation and will not dispose of
all or substantially all of its assets (by sale, lease or otherwise), except as
otherwise specifically authorized elsewhere in this Indenture or under
comparable provisions of any future indenture of the Corporation with respect
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to subsequent issues of bonds, notes or other obligations of the Corporation, or
consolidate with or merge into another corporation or permit any other
corporation to consolidate with or merge into it unless:
A. the surviving, resulting or transferee corporation, as the
case may be, shall be organized under the laws of the United States or
one of the states thereof;
B. at least thirty (30) days before any merger, consolidation
or transfer of assets becomes effective, the Corporation shall give the
Trustee written notice of the proposed transaction;
C. immediately after giving effect to any merger,
consolidation or transfer of assets, no Event of Default shall have
occurred and be continuing;
D. the Rating Agency Condition shall have been satisfied with
respect to any merger, consolidation or transfer of assets; and
E. prior to or concurrently with any merger, consolidation or
transfer of assets, (1) any action as is necessary to maintain the lien
and security interest created in favor of the Trustee by this Indenture
shall have been taken, (2) the surviving, resulting or transferee
corporation, as the case may be, if other than the Corporation, shall
deliver to the Trustee an instrument assuming all of the obligations of
the Corporation under this Indenture, any Notes, any Swap Agreement,
any Credit Enhancement Facility, any Demand Purchase Agreement, any
Remarketing Agreement, any Depositary Agreement, any Auction Agent
Agreement, the Student Loan Purchase Agreements, any Transfer
Agreements, any Servicing Agreement and any Bailment Agreement,
together with the consent of the other parties, if any, to each such
instrument to such assumption, and (3) the Corporation shall have
delivered to the Trustee and each Rating Agency a Corporation
Certificate and an opinion of Counsel (which shall describe the actions
taken as required by clause (1) of this paragraph or that no such
action need be taken) each stating that all conditions precedent herein
provided for relating to such merger, consolidation or transfer of
assets have been compiled with (including any filing required by the
Exchange Act).
Section 5.17. Fidelity Bonds. The Corporation shall obtain and maintain
in force fidelity bonds upon all personnel insuring against any loss or damage
which the Trustee or the Corporation might suffer as a consequence of any act of
such personnel in an amount required by any supervising agency of the federal or
any State government, or, if not so required, in such reasonable amount as may
be determined from time to time by the Corporation.
Section 5.18. Amendment of Student Loan Purchase Agreements. The
Corporation shall notify the Trustee in writing of any proposed amendments to
the Student Loan Purchase Agreements. No such amendment shall become effective
unless and until the Trustee consents in writing thereto, which consent shall
not be given unless the Trustee receives an opinion of Counsel that such
amendment is required by the Higher Education Act or the related Alternative
Loan Program, or is not to the prejudice of the Holders of the Notes or Other
Beneficiaries.
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Section 5.19. Enforcement and Amendment of Guarantee Agreements. So
long as any Notes are Outstanding or other obligations to Other Beneficiaries
are Outstanding and Financed Eligible FFELP Loans are Guaranteed by a Guarantee
Agency, the Trustee (a) will maintain the Guarantee Agreements and will
diligently enforce its rights thereunder; (b) will enter into such other similar
or supplemental agreements as shall be required to maintain the benefits thereof
for all Financed Eligible FFELP Loans; and (c) will not voluntarily consent to
or permit any rescission of or consent to any amendment to or otherwise take any
action under or in connection with the Guarantee Agreements or any similar or
supplemental agreements which in any manner will adversely affect the rights of
the Holders from time to time of the Notes or Other Beneficiaries.
Section 5.20. Amendment of Remarketing Agreements and Depositary
Agreements. The Corporation shall notify the Trustee and any related Credit
Facility Provider in writing of any proposed amendments to any Remarketing
Agreement or Depositary Agreement. No such amendment shall become effective
unless and until (1) the Trustee consents in writing thereto, which consent
shall not be given unless the Trustee receives an opinion of Counsel that such
amendment is required by a Credit Enhancement Facility, a Demand Purchase
Agreement or this Indenture or is not to the material prejudice of the Holders
of the Notes, and (2) any related Credit Facility Provider consents in writing
thereto, which consent shall not be unreasonably withheld, provided that no
consent of the Credit Facility Provider shall be required if the Credit Facility
Provider receives an opinion of Counsel that such amendment is required by this
Indenture.
Section 5.21. Additional Covenants of the Corporation. The Corporation
agrees and covenants for the benefit of the Trustee, each Noteholder and each
Other Beneficiary, during the term of this Indenture, and to the fullest extent
permitted by applicable law, that:
(a) No Other Business. It shall not engage in any business
other than financing, originating, purchasing, owning, selling and
managing Student Loans in the manner contemplated by its certificate of
incorporation and this Indenture and activities incidental thereto.
(b) No Borrowing. It shall not issue, incur, assume, guarantee
or otherwise become liable, directly or indirectly, for any
indebtedness except for (i) the Notes and (ii) any Other Obligations or
other indebtedness arising under this Indenture or otherwise permitted
by its certificate of incorporation. The proceeds of the Notes shall be
used exclusively to fund the origination or purchase of Student Loans
and for such other purposes as are specified in this Indenture.
(c) Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by its certificate of incorporation and this Indenture,
it shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of
assuming 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,
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assets or securities of, any other interest in, or make any capital
contribution to, any other Person.
(d) Restricted Payments. Except as permitted by its
certificate of incorporation and this Indenture, it shall not, directly
or indirectly, (i) make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination
thereof, with respect to any ownership or equity interest or security
in or of the Corporation, (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. The Corporation will not, directly or indirectly, make
payments to or distributions from any of the Funds or Accounts except
in accordance with this Indenture.
(e) Non-petition. It shall not, for any reason, institute
proceedings for itself to be adjudicated a bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings
against itself, or file a petition seeking or consenting to
reorganization or relief under any applicable Federal or state law
relating to the bankruptcy of itself, or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of itself or a substantial part of its assets or any
part of the Trust Estate or cause or permit itself to make any
assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any action in furtherance of
any such action.
(f) Other Parties. It shall obtain from each counterparty to
each agreement to which it is a party, an agreement by each such
counterparty that such counterparty shall not institute against, or
join any other Person in instituting against, it, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other similar proceedings under the laws of the United States or any
state of the United States.
(g) Separate Business. It will:
(i) (A) maintain and prepare financial reports,
financial statements, books and records and bank accounts
separate from those of its Affiliates and any other person or
entity and (B) not permit any Affiliate or any other person or
entity independent access to its bank accounts;
(ii) not commingle its funds and other assets with
those of any Affiliate, any guarantor of any of the
obligations of the Corporation (each, a "Guarantor"), any
Affiliate of any Guarantor or any other person or entity
(other than any such commingling which might result from the
performance of the Servicer's duties in accordance with any
Servicing Agreement);
(iii) conduct its own business in its own name and
will hold all of its assets in its own name;
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(iv) remain solvent and pay its debts and liabilities
(including employment and overhead expenses) from its assets
as the same become due;
(v) do all things necessary to observe corporate
formalities, and preserve its existence as a single-purpose,
bankruptcy-remote entity in accordance with the standards of
the Rating Agencies providing ratings on the Notes, as such
standards are in effect on the date of issuance of the Notes;
(vi) enter into transactions with Affiliates only if
each such transaction is commercially reasonable and on
substantially similar terms as a transaction that would be
entered into on an arm's length basis with a person or entity
other than an Affiliate of the Corporation;
(vii) pay the salaries of its own employees from its
own funds and maintain a sufficient number of employees in
light of its contemplated business operations;
(viii) compensate each of its consultants and agents
from its own funds for services provided to it and pay from
its own assets all obligations of any kind incurred;
(ix) not (i) acquire obligations or securities of any
Affiliate or any of the stockholders of the Corporation or
(ii) buy or hold any evidence of indebtedness issued by any
other person or entity, other than cash, Investment
Securities, investment-grade securities and Student Loans;
(x) allocate fairly and reasonably and pay from its
own funds the cost of (i) any overhead expenses (including
paying for any office space) shared with any Affiliate of the
Corporation and (ii) any services (such as asset management,
legal and accounting) that are provided jointly to the
Corporation and one or more of its Affiliates;
(xi) maintain and utilize separate stationery,
invoices and checks bearing its own name and allocate separate
office space (which may be a separately identified area in
office space shared with one or more Affiliates of the
Corporation) and maintain a separate sign in the office
directory of the building in which the Corporation maintains
its principal place of business;
(xii) not make any loans or advances to, or pledge
its assets for the benefit of, any other person or entity,
including, without limitation, any Affiliate or Guarantor or
any Affiliate of any Guarantor (except as contemplated by its
certificate of incorporation and this Indenture);
(xiii) be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any
other person or entity;
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(xiv) in the event that any authorized officer knows
of any misunderstanding regarding the separate identity of the
Corporation, correct such misunderstanding;
(xv) not identify itself or any of its Affiliates as
a division or part of any other entity; and
(xvi) maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size
and character and in light of its contemplated business
operations.
Section 5.22. Representations and Warranties of the Corporation. By
execution of this Indenture, the Corporation makes the following representations
and warranties:
(a) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and as such business is currently conducted and is proposed to be
conducted pursuant to this Indenture.
(b) Due Qualification. It is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property, the conduct of its business and the performance
of its obligations under this Indenture, the Notes and each Other
Obligation requires such qualification.
(c) Power and Authority. It has the power and authority to
execute and deliver this Indenture and to perform its obligations
pursuant thereto; and the execution, delivery and performance of this
Indenture, the Notes and each Other Obligation have been duly
authorized by all necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization of, or registration or declaration with, any Person or
any governmental authority, bureau or agency is required to be obtained
by the Corporation in connection with the execution, delivery or
performance of this Indenture, the Notes or any Other Obligation,
except for such as have been obtained, effected or made.
(e) No Violation. The consummation of the transactions
contemplated by this Indenture, the Notes and each Other Obligation and
the fulfillment of its obligations under this Indenture, the Notes and
each Other Obligation will not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under, its articles or
certificate of incorporation or by-laws, or any indenture, agreement,
mortgage, deed of trust or other instrument to which it is a party or
by which it is bound, or result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, or
violate any law, order, rule or regulation applicable to
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it of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over it or its
properties (A) asserting the invalidity of this Indenture, any Note or
any Other Obligation, (B) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this
Indenture, any Note or any Other Obligation, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability
of, this Indenture, any Note or any Other Obligation, or (D) seeking to
adversely affect the Federal income tax or other Federal, state or
local tax attributes of any Note.
(g) Place of Business. The principal executive offices of the
Corporation are in Aberdeen, South Dakota, and the offices where the
Corporation keeps its records concerning the Financed Student Loans and
related documents are in Aberdeen, South Dakota.
(h) Not an Investment Company. The Corporation is not an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, or is exempt from all provisions of such Act.
(i) Binding Obligations. This Indenture, the Notes and each
Other Obligation constitutes the legal, valid and binding obligation of
the Corporation, enforceable against the Corporation in accordance with
its terms, except (A) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect, affecting the enforcement of
creditors' rights in general, and (B) as such enforceability may be
limited by general principles of equity (whether considered in a suit
at law or in equity).
Section 5.23. Trustee to Furnish Monthly Servicing Report. The Trustee
shall distribute to each Noteholder (and to each Person requesting a copy
thereof that is the beneficial owner of a Note, as evidenced to the satisfaction
of the Trustee, at such address as such beneficial owner shall specify in
writing to the Trustee) and to each Rating Agency a copy of each Monthly
Servicing Report within two (2) Business Days after receipt thereof.
Section 5.24. Change in Name or State of Incorporation of Corporation.
The Corporation shall, at least ten (10) Business Days prior thereto, give the
Trustee written notice of any change in its name or state of incorporation. Upon
receipt of any such notice, the Trustee shall take such actions as, based upon
the advice of Counsel, are necessary to perfect or maintain the perfection of
the Trustee's security interest in the Trust Estate. The Corporation hereby
authorizes the Trustee, as secured party, to execute and deliver on its behalf
any document or instrument necessary to perfect or maintain the perfection of
such security interest.
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Section 5.25. Enforcement of Bailment Agreements. The Trustee shall
cause to be diligently enforced, and take all reasonable steps, actions and
proceedings necessary for the enforcement of, all terms, covenants and
conditions of all Bailment Agreements. The Trustee shall not permit the release
of the obligations of any bailee under any Bailment Agreement and shall at all
times, to the extent permitted by law, cause to be defended, enforced, preserved
and protected the rights and privileges of the Trustee under or with respect to
each Bailment Agreement. The Trustee shall not consent or agree to or permit any
amendment or modification of any Bailment Agreement which will in any manner
materially adversely affect the rights or security of any Beneficiaries. Nothing
in this Indenture shall be construed to prevent the Trustee (1) from taking
actions to replace any bailee if it is reasonably prudent to do so in light of
all circumstances then existing and such action will not materially adversely
affect the security for any Beneficiaries, or (2) from consenting or agreeing to
or permitting amendments or modifications to any Bailment Agreement if (a) it is
reasonably prudent to do so in light of all circumstances then existing, and (b)
such action will not materially adversely affect the security for any
Beneficiaries.
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ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. If any of the following events occur,
it is hereby defined as and declared to be and to constitute an Event of
Default, whatever the reason therefor and whether voluntary or involuntary or
effected by operation of law:
(A) default in the due and punctual payment of any interest on
any Class A Note; or
(B) default in the due and punctual payment of the principal
of, or premium, if any, on, any Class A Note, whether at the Stated
Maturity thereof, at the date fixed for redemption thereof (including,
but not limited to, Sinking Fund Payment Dates) or otherwise upon the
maturity thereof; or
(C) default by the Corporation in its obligation to purchase
any Class A Note on a Purchase Date or Mandatory Tender Date therefor;
or
(D) default in the due and punctual payment of any amount owed
by the Corporation to any Other Senior Beneficiary under a Senior Swap
Agreement, Senior Credit Enhancement Facility or Senior Demand Purchase
Agreement; or
(E) if no Senior Obligations are Outstanding, default in the
due and punctual payment of any interest on any Class B Note; or
(F) if no Senior Obligations are Outstanding, default in the
due and punctual payment of the principal of, or premium, if any, on,
any Class B Note, whether at the Stated Maturity thereof, at the date
fixed for redemption thereof (including, but not limited to, Sinking
Fund Payment Dates) or otherwise upon the maturity thereof; or
(G) if no Senior Obligations are Outstanding, default by the
Corporation in its obligation to purchase any Class B Note on a
Purchase Date or Mandatory Tender Date therefor; or
(H) if no Senior Obligations are Outstanding, default in the
due and punctual payment of any amount owed by the Corporation to any
Other Subordinate Beneficiary under a Subordinate Swap Agreement,
Subordinate Credit Enhancement Facility or Subordinate Demand Purchase
Agreement; or
(I) if no Senior Obligations or Subordinate Obligations are
Outstanding, default in the due and punctual payment of any interest on
any Class C Note; or
(J) if no Senior Obligations or Subordinate Obligations are
Outstanding, default in the due and punctual payment of the principal
of, or premium, if any, on, any Class C Note, whether at the Stated
Maturity thereof, at the date fixed for redemption thereof
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(including, but not limited to, Sinking Fund Payment Dates) or
otherwise upon the maturity thereof; or
(K) default in the performance of any of the Corporation's
obligations with respect to the transmittal of moneys to be credited to
the Revenue Fund, the Indemnification Fund, the Acquisition Fund, the
Alternative Loan Guarantee Fund or the Note Fund under the provisions
hereof and such default shall have continued for a period of thirty
(30) days; or
(L) default in the performance or observance of any other of
the covenants, agreements or conditions on the part of the Corporation
in this Indenture or in the Notes contained, and such default shall
have continued for a period of thirty (30) days after written notice
thereof, specifying such default, shall have been given by the Trustee
to the Corporation, which may give such notice in its discretion and
shall give such notice at the written request of the Acting
Beneficiaries Upon Default, or by the Holders of not less than ten
percent (10%) in aggregate Principal Amount of the Outstanding Notes to
the Corporation and the Trustee; provided that, if the default is such
that it can be corrected, but not within such thirty (30) days, it
shall not constitute an Event of Default if corrective action is
instituted by the Corporation within such thirty (30) days and is
diligently pursued until the default is corrected; or
(M) if the Corporation shall
(1) admit in writing its inability to pay its debts
generally as they become due; or
(2) consent to the appointment of a custodian (as
that term is defined in the federal Bankruptcy Code) for or
assignment to a custodian of the whole or any substantial part
of the Corporation's property, or fail to stay, set aside or
vacate within ninety (90) days from the date of entry thereof
any order or decree entered by a court of competent
jurisdiction ordering such appointment or assignment; or
(3) commence any proceeding or file a petition under
the provisions of the federal Bankruptcy Code for liquidation,
reorganization or adjustment of debts, or under any insolvency
law or other statute or law providing for the modification or
adjustment of the rights of creditors or fail to stay, set
aside or vacate within ninety (90) days from the date of entry
thereof any order or decree entered by a court of competent
jurisdiction pursuant to an involuntary proceeding, whether
under federal or state law, providing for liquidation or
reorganization of the Corporation or modification or
adjustment of the rights of creditors.
Section 6.2. Acceleration. (A) (i) Whenever any Event of Default
described in subsection (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) or
(M) of Section 6.1 shall have occurred and be continuing, the Trustee may (and
upon the written request of the Acting Beneficiaries Upon Default, the Trustee
shall), by notice in writing delivered to the Corporation, declare the principal
of and interest accrued on all Notes then Outstanding due and payable. A
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copy of such notice shall also be provided to any Depositary, any Remarketing
Agent, any Auction Agent and any Broker-Dealer.
(ii) Whenever any Event of Default described in subsection (L) of
Section 6.1 shall have occurred and be continuing, (1) the Trustee may, by
notice in writing delivered to the Corporation, declare the principal of and
interest accrued on all Notes then Outstanding due and payable; and (2) the
Trustee shall, upon the written request of the Acting Beneficiaries Upon
Default, by notice in writing delivered to the Corporation, declare the
principal of and accrued interest on all Notes then Outstanding due and payable.
A copy of such notice shall also be provided to any Depositary, any Remarketing
Agent, any Auction Agent and any Broker-Dealer.
(B) In the event that the Trustee shall declare the principal of and
interest accrued on all Notes then Outstanding due and payable in accordance
with subsection (A) of this Section 6.2, such principal and interest shall
become immediately due and payable on the date of declaration. At any time after
such a declaration of acceleration has been made, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the Acting
Beneficiaries Upon Default may, by written notice to the Corporation and the
Trustee, rescind and annul such declaration and its consequences if:
(1) There has been paid to or deposited with the Trustee by or
for the account of the Corporation, or provision satisfactory to the
Trustee has been made for the payment of, a sum sufficient to pay:
(a) if Senior Obligations are Outstanding:
(i) all overdue installments of interest on
all Class A Notes;
(ii) the principal of (and premium, if any,
on) any Class A Notes which have become due otherwise
than by such declaration of acceleration, together
with interest thereon at the rate or rates borne by
such Class A Notes;
(iii) to the extent that payment of such
interest is lawful, interest upon overdue
installments of interest on the Class A Notes at the
rate or rates borne by such Class A Notes;
(iv) all Other Senior Obligations which have
become due other than as a direct result of such
declaration of acceleration;
(v) all other sums required to be paid to
satisfy the Corporation's obligations with respect to
the transmittal of moneys to be credited to the
Revenue Fund, the Indemnification Fund, the
Acquisition Fund and the Interest Account under the
provisions of this Indenture; and
(vi) all sums paid or advanced by the
Trustee under this Indenture and the reasonable
compensation, expenses, disbursements and advances
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of the Trustee, its agents and counsel and any Paying
Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers; or
(b) if no Senior Obligations are Outstanding but
Subordinate Obligations are Outstanding:
(i) all overdue installments of interest on
all Class B Notes;
(ii) the principal of (and premium, if any,
on) any Class B Notes which have become due other
than by such declaration of acceleration, together
with interest thereon at the rate or rates borne by
such Class B Notes;
(iii) to the extent that payment of such
interest is lawful, interest upon overdue
installments of interest on the Class B Notes at the
rate or rates borne by such Class B Notes;
(iv) all Other Subordinate Obligations which
have become due otherwise as a direct result of such
declaration of acceleration;
(v) all other sums required to be paid to
satisfy the Corporation's obligations with respect to
the transmittal of moneys to be credited to the
Revenue Fund, the Indemnification Fund, the
Acquisition Fund and the Interest Account under the
provisions of this Indenture; and
(vi) all sums paid or advanced by the
Trustee under this Indenture and the reasonable
compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any Paying
Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers; or
(c) if no Senior Obligations or Subordinate
Obligations are Outstanding:
(i) all overdue installments of interest on
all Class C Notes and all overdue sinking fund
installments for the retirement of Class C Term
Notes;
(ii) the principal of (and premium, if any,
on) any Class C Notes which have become due otherwise
than by such declaration of acceleration and interest
thereon at the rate or rates borne by such Class C
Notes;
(iii) to the extent that payment of such
interest is lawful, interest upon overdue
installments of interest on the Class C Notes at the
rate or rates borne by such Class C Notes;
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(iv) all other sums required to be paid to
satisfy the Corporation's obligations with respect to
the transmittal of moneys to be credited to the
Revenue Fund, the Indemnification Fund and the
Acquisition Fund under the provisions of this
Indenture; and
(v) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel and any Paying Agents, Deposit
Agents, Remarketing Agents, Depositaries, Auction
Agents and Broker-Dealers.
(2) All Events of Default, other than the non-payment of the
principal of Notes or Other Obligations which have become due solely
by, or as a direct result of, such declaration of acceleration, have
been cured or waived as provided in Section 6.13 hereof.
No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereon.
Section 6.3. Other Remedies; Rights of Beneficiaries. If an Event of
Default has occurred and is continuing, the Trustee may (a) institute judicial
proceedings in its own name and as or on behalf of a trustee of an express trust
for the collection of all amounts then payable on the Notes and any Other
Obligations or under this Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Corporation
and any other obligor upon such Notes and Other Obligations moneys adjudged due,
and (b) pursue any other available remedy by suit at law or in equity to enforce
the covenants of the Corporation herein, including, without limitation, any
remedy of a secured party under the South Dakota Uniform Commercial Code,
foreclosure and mandamus, and may pursue such appropriate judicial proceedings
as the Trustee shall deem most effective to protect and enforce, or aid in the
protection and enforcement of, the covenants and agreements herein.
If an Event of Default shall have occurred and is continuing, and if it
shall have been requested so to do by the Holders of not less than twenty-five
percent (25%) in aggregate Principal Amount of all Notes then Outstanding or any
Other Beneficiary and shall have been indemnified as provided in Section 7.1
hereof, the Trustee shall be obliged to exercise such one or more of the rights
and powers conferred by this Section 6.3 as the Trustee, being advised by its
Counsel, shall deem most expedient in the interests of the Beneficiaries;
provided, however, that the Trustee shall have the right to decline to comply
with any such request if the Trustee shall be advised by Counsel that the action
so requested may not lawfully be taken or if the Trustee receives, before
exercising such right or power, contrary instructions from the Holders of not
less than a majority in aggregate Principal Amount of the Notes then Outstanding
or from any Other Beneficiary.
Notwithstanding any other provisions of this Article Six, if an "Event
of Default" (as defined therein) occurs under a Swap Agreement, a Credit
Enhancement Facility or a Demand Purchase Agreement and, as a result, the Other
Beneficiary that is a party thereto is entitled to exercise one or more remedies
thereunder, such Other Beneficiary may exercise such remedies,
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including, without limitation, the termination of such agreement, as provided
therein, in its own discretion; provided that the exercise of any such remedy
shall not adversely affect the legal ability of the Trustee or Acting
Beneficiaries Upon Default to exercise any remedy available hereunder.
No remedy by the terms of this Indenture conferred upon or reserved to
the Trustee or to the Beneficiaries is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the Beneficiaries
hereunder or now or hereafter existing at law or in equity or by statute. The
assertion or employment of any right or remedy hereunder shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any such Event of Default or acquiescence therein; and every such
right and power may be exercised from time to time and as often as may be deemed
expedient by the Trustee or the Acting Beneficiaries Upon Default, as the case
may be.
Section 6.4. Direction of Proceedings by Acting Beneficiaries Upon
Default. The Acting Beneficiaries Upon Default shall have the right, at any
time, by an instrument or instruments in writing executed and delivered to the
Trustee, to direct the method and place of conducting all proceedings to be
taken in connection with the enforcement of the terms and conditions of this
Indenture; provided that (a) such direction shall not be otherwise than in
accordance with the provisions of law and of this Indenture; (b) the Trustee
shall not determine that the action so directed would be unjustly prejudicial to
the Holders of Notes or Other Beneficiaries not taking part in such direction,
other than by effect of the subordination of any of their interests hereunder;
and (c) the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
Section 6.5. Waiver of Stay or Extension Laws. To the extent that such
rights may lawfully be waived, neither the Corporation nor anyone claiming
through it or under it shall or will set up, claim, or seek to take advantage of
any stay or extension laws now or hereafter in force, which may affect the
covenants or agreements contained in this Indenture, or in the Notes, and the
Corporation, for itself and all who may claim through or under it, hereby
waives, to the extent that it lawfully may do so, the benefit of all such laws.
Section 6.6. Application of Moneys. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
Six shall, after, except as otherwise provided in a Supplemental Indenture,
payment of the cost and expenses of the proceedings resulting in the collection
of such moneys and of the expenses, liabilities and advances incurred or made by
the Trustee with respect thereto (provided that any moneys or Investment
Securities held pursuant to Section 11.1 hereof with respect to Notes no longer
deemed Outstanding hereunder shall not be available for, nor be applied to, the
payment of any such costs, expenses, liabilities or advances), be applied as
follows:
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(A) Unless the principal of all the Outstanding Notes shall
have become or shall have been declared due and payable, all such
moneys shall be applied:
FIRST: To the payment to the Senior Beneficiaries of all
installments of principal and interest then due on the Class A Notes
and all Other Senior Obligations, and if the amount available shall not
be sufficient to pay all such amounts in full, then to the payment
ratably, in proportion to the amounts due, without regard to due date,
to the Class A Noteholders and to each Other Senior Beneficiary,
without any discrimination or preference;
(the Trustee shall apply the amount so apportioned to the Class A
Noteholders, as follows:
first, to the payment of the Holders of the Class A
Notes of all installments of interest (other than interest on
overdue principal) then due and payable in the order in which
such installments became due and payable, and if the amount
available shall not be sufficient to pay in full any
particular installment, then to the payment, ratably,
according to the amounts due on such installment and other
amounts, to the Persons entitled thereto, without any
discrimination or preference, and
second, to the payment to the Holders of the Class A
Notes of the unpaid principal of any of the Class A Notes
which shall have become due and payable (other than Class A
Notes called for redemption for the payment of which money is
held pursuant to the provisions of this Indenture) in the
order of their stated payment dates, with interest on the
Principal Amount of such Notes at the respective rates
specified therein from the respective dates upon which such
Class A Notes became due and payable, and, if the amount
available shall not be sufficient to pay in full the principal
of the Class A Notes by their stated terms due and payable on
any particular date, then to the payment of such principal,
ratably, according to the amount of such principal then due on
such date, to the Persons entitled thereto without any
discrimination or preference;)
SECOND: To the payment to the Subordinate Beneficiaries of all
installments of principal and interest then due on the Class B Notes
and all Other Subordinate Obligations, and if the amount available
shall not be sufficient to pay all such amounts in full, then to the
payment ratably, in proportion to the amounts due, without regard to
due date, to the Class B Noteholders and to each Other Subordinate
Beneficiary, without any discrimination or preference;
(the Trustee shall apply the amount so apportioned to the Class B
Noteholders, as follows:
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first, to the payment of the Holders of the Class B
Notes of all installments of interest (other than interest on
overdue principal) then due and payable in the order in which
such installments became due and payable, and if the amount
available shall not be sufficient to pay in full any
particular installment, then to the payment, ratably,
according to the amounts due on such installment and other
amounts, to the Persons entitled thereto, without any
discrimination or preference, and
second, to the payment to the Holders of the Class B
Notes of the unpaid principal of any of the Class B Notes
which shall have become due and payable (other than Class B
Notes called for redemption for the payment of which money is
held pursuant to the provisions of this Indenture) in the
order of their stated payment dates, with interest on the
Principal Amount of such Notes at the respective rates
specified therein from the respective dates upon which such
Class B Notes became due and payable, and, if the amount
available shall not be sufficient to pay in full the principal
of the Class B Notes by their stated terms due and payable on
any particular date, then to the payment of such principal,
ratably, according to the amount of such principal then due on
such date, to the Persons entitled thereto without any
discrimination or preference;)
THIRD, to the payment of the Holders of the Class C Notes of
all installments of interest (other than interest on overdue principal)
then due and payable in the order in which such installments became due
and payable, and if the amount available shall not be sufficient to pay
in full any particular installment, then to the payment, ratably,
according to the amounts due on such installment and other amounts, to
the Persons entitled thereto, without any discrimination or preference;
and
FOURTH, to the payment to the Holders of the Class C Notes of
the unpaid principal of any of the Class C Notes which shall have
become due and payable (other than Class C Notes called for redemption
for the payment of which money is held pursuant to the provisions of
this Indenture) in the order of their stated payment dates, with
interest on the Principal Amount of such Class C Notes at the
respective rates specified therein from the respective dates upon which
such Class C Notes became due and payable, and, if the amount available
shall not be sufficient to pay in full the principal of the Class C
Notes by their stated terms due and payable on any particular date,
then to the payment of such principal, ratably, according to the amount
of such principal then due on such date, to the Persons entitled
thereto without any discrimination or preference.
(B) If the principal of all Outstanding Notes shall have
become due or shall have been declared due and payable and such
declaration has not been annulled and rescinded under the provisions of
this Article Six, all such moneys shall be applied, as follows:
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FIRST, to the payment to the Senior Beneficiaries of the
principal and interest then due and unpaid upon the Class A Notes and
all Other Senior Obligations, without preference or priority of
principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or of
any Senior Beneficiary over any other Senior Beneficiary, ratably,
according to the amounts due, to the Persons entitled thereto without
any discrimination or preference; and
SECOND, to the payment to the Subordinate Beneficiaries of the
principal and interest then due and unpaid upon the Class B Notes and
all Other Subordinate Obligations, without preference or priority of
principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or of
any Subordinate Beneficiary over any other Subordinate Beneficiary,
ratably, according to the amounts due, to the Persons entitled thereto
without any discrimination or preference, and
THIRD, to the payment of the principal and premium, if any,
and interest then due and unpaid upon the Class C Notes, without
preference or priority of principal over interest or of interest over
principal, or of any installment of interest over any other installment
of interest, or of any Class C Note over any other Class C Note,
ratably, according to the amounts due respectively for principal and
interest, and other amounts owing, to the Persons entitled thereto
without any discrimination or preference.
(C) If the principal of all the Outstanding Notes shall have
been declared due and payable and if such declaration shall thereafter
have been rescinded and annulled under the provisions of Section 6.2
hereof, then (subject to the provisions of paragraph (B) of this
Section 6.6, in the event that the principal of all the Outstanding
Notes shall later become or be declared due and payable) the money held
by the Trustee hereunder shall be applied in accordance with the
provisions of paragraph (A) of this Section 6.6.
Whenever moneys are to be applied by the Trustee pursuant to the
provisions of this Section 6.6, such moneys shall be applied by it at such
times, and from time to time, as the Trustee shall determine, having due regard
to the amount of such moneys available for application and the likelihood of
additional moneys becoming available for such application in the future.
Whenever the Trustee shall apply such funds, it shall fix the date (which shall
be an Interest Payment Date unless it shall deem another date more suitable)
upon which such application is to be made and upon such date interest on the
amounts of principal to be paid shall cease to accrue. The Trustee shall give
such notice as it may deem appropriate of the deposits with it of any such
moneys and of the fixing of any such date, and shall not be required to make
payment to the Holder of any unpaid Note until such Note shall be presented to
the Trustee for appropriate endorsement or for cancellation if fully paid.
Whenever all Notes and interest thereon and all Other Obligations have
been fully paid under the provisions of this Section 6.6, and all expenses and
charges of the Trustee have been paid, the Corporation and the Trustee shall be
restored to their former positions hereunder.
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Section 6.7. Remedies Vested in Trustee. All rights of action,
including the right to file proof of claims under this Indenture or under any of
the Notes may be enforced by the Trustee without the possession of any of the
Notes or the production thereof in any trial or other proceedings relating
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any Beneficiaries, and any recovery of judgment shall be for the
equal benefit of all Beneficiaries in respect of which such judgment has been
recovered.
Section 6.8. Limitation on Suits by Beneficiaries. Except as may be
permitted in a Supplemental Indenture with respect to an Other Beneficiary, no
Holder of any Note or Other Beneficiary shall have any right to institute any
suit, action or proceeding in equity or at law for the enforcement of this
Indenture or for the execution of any trust hereof or for the appointment of a
receiver or any other remedy hereunder unless (1) an Event of Default shall have
occurred and be continuing, (2) the Holders of not less than twenty-five percent
(25%) in aggregate Principal Amount of Notes then Outstanding or any Other
Beneficiary shall have made written request to the Trustee, (3) such Beneficiary
or Beneficiaries shall have offered to the Trustee indemnity, as provided in
Section 7.1 hereof, (4) the Trustee shall have thereafter failed for a period of
sixty (60) days after the receipt of the request and indemnification or refused
to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name and (5) no direction inconsistent with such written
request shall have been given to the Trustee during such sixty (60)-day period
by the Holders of not less than a majority in aggregate Principal Amount of the
Notes then Outstanding or by any Other Beneficiary; it being understood and
intended that no one or more Holders of the Notes or any Other Beneficiary shall
have any right in any manner whatsoever to affect, disturb or prejudice the lien
of this Indenture by its, his, her or their action or to enforce any right
hereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the benefit of the Holders of all Outstanding Notes and Other
Beneficiaries hereunder as their interests may appear hereunder; provided,
however, that, notwithstanding the foregoing provisions of this Section 6.8, the
Acting Beneficiaries Upon Default may institute any such suit, action or
proceeding in their own names for the benefit of the Holders of all Outstanding
Notes and Other Beneficiaries hereunder.
Section 6.9. Unconditional Right of Noteholders To Enforce Payment.
Notwithstanding any other provision in this Indenture, the Holder of any Note
shall have the right, which is absolute and unconditional, to receive payment of
the principal of, premium, if any, and interest on such Note in accordance with
the terms thereof and hereof and, upon the occurrence of an Event of Default
with respect thereto, to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
Section 6.10. Trustee May File Proofs of Claims. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Corporation or the property of the Corporation, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Corporation for the
payment of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
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A. to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of
the Notes then Outstanding and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and Counsel and
any Paying Agents, Authenticating Agents, Note Registrar, Deposit
Agents, Remarketing Agents, Depositaries, Auction Agents and
Broker-Dealers) and of the Beneficiaries allowed in such judicial
proceeding, and
B. to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Noteholder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Noteholders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses and
disbursements of the Trustee, its agents and Counsel and any Paying Agents,
Authenticating Agents, Note Registrar, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers.
Nothing herein shall affect the right of any Paying Agent,
Authenticating Agent, Note Registrar, Deposit Agent, Remarketing Agent,
Depositary, Auction Agent or Broker-Dealer or to file proofs of claim on their
own behalf in any such proceeding.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder or Other
Beneficiary any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or Other Beneficiary, or
to authorize the Trustee to vote in respect of the claim of any Noteholder in
any such proceeding.
Section 6.11. Undertaking for Costs. The Corporation and the Trustee
agree, and each Holder of any Note by his acceptance thereof 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 Trustee for any action taken or omitted by it as 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 6.11 shall not apply to (a) any
suit instituted by the Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than ten
percent (10%) of the Outstanding Principal Amount of the Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of the principal
of, premium, if any, or interest on any Note in accordance with Section 6.9
hereof.
Section 6.12. Termination of Proceedings. In case the Trustee or any
Beneficiary shall have proceeded to enforce any right under this Indenture by
the appointment of a receiver,
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or otherwise, and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to the Trustee or such
Beneficiary, then and in every such case the Corporation and the Trustee or such
Beneficiary shall, subject to any final determination in such proceedings, be
restored to their former positions and rights hereunder with respect to this
Indenture, and all rights, remedies and powers of the Trustee and the
Beneficiaries shall continue as if no such proceedings had been taken.
Section 6.13. Waiver of Defaults and Events of Default. The Trustee
shall, unless the Trustee has declared the principal of and interest on all
Outstanding Notes immediately due and payable in accordance with Section 6.2
hereof and a judgment or decree for payment of the money due has been obtained
by the Trustee, waive any default or Event of Default hereunder and its
consequences but only upon written request of the Acting Beneficiaries Upon
Default; provided, however, that there shall not be waived (a) any Event of
Default arising from the acceleration of the maturity of the Notes, except upon
the rescission and annulment of such declaration as described in Section 6.2
hereof; (b) any Event of Default in the payment when due of any amount owed to
any Beneficiary (including payment of principal of or interest on any Note)
except with the consent of such Beneficiary or unless, prior to such waiver, the
Corporation has paid or deposited (or caused to be paid or deposited) with the
Trustee a sum sufficient to pay all amounts owed to such Beneficiary (including,
to the extent permitted by law, interest upon overdue installments of interest);
(c) any Event of Default arising from the failure of the Corporation to pay
unpaid expenses of the Trustee, its agents and counsel, and any Authenticating
Agent, Paying Agents, Note Registrar, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers as required by this Indenture,
unless, prior to such waiver, the Corporation has paid or deposited (or caused
to be paid or deposited) with the Trustee sums required to satisfy such
obligations of the Corporation under the provisions of this Indenture; or (d)
any default in respect of a covenant or provision hereof which, under Article
Eight hereof, cannot be modified or amended without the consent of the Holder of
each Note affected thereby. No such waiver shall extend to any subsequent or
other default or Event of Default, or impair any right consequent thereon.
Section 6.14. Inspection of Books and Records. The Corporation
covenants that if an Event of Default shall have happened and shall not have
been remedied, the books of record and account of the Corporation relating to
the Program shall at all times be subject to the inspection and use of the
Trustee and any Holder of at least twenty five percent (25%) of the Principal
Amount of any series of Notes any of which are then Outstanding and of their
respective agents and attorneys.
The Corporation covenants that if an Event of Default shall have
happened and shall not have been remedied, the Corporation will continue to
account, as a trustee of an express trust, for all other money, securities and
property pledged under this Indenture.
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ARTICLE SEVEN
FIDUCIARIES
Section 7.1. Acceptance of the Trustee. The Trustee hereby accepts the
trusts imposed upon it by this Indenture, and agrees to perform said trusts, but
only upon and subject to the following terms and conditions:
(A) Except during the continuance of an Event of Default,
(1) the 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 Trustee; and
(2) in the absence of bad faith on its part, the
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
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by
any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Indenture.
(B) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
(C) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that
(1) this subsection (C) shall not be construed to
limit the effect of subsection (A) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Acting Beneficiaries Upon
Default relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of
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any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to
it.
(D) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 7.1 and to the provisions of the TIA.
(E) The Trustee may execute any of the trusts or powers hereof
and perform any of its duties by or through attorneys, agents,
receivers, or employees but shall be answerable for the conduct of the
same in accordance with the standard specified in subsection (B) above,
and shall be entitled to advice of Counsel concerning all matters of
trusts hereof and duties hereunder, and may in all cases pay such
reasonable compensation to any attorney, agent, receiver or employee
retained or employed by it in connection herewith. The Trustee may act
upon the opinion or advice of any attorney or accountant selected by it
in the exercise of reasonable care. The Trustee shall not be
responsible for any loss or damage resulting from any action or
nonaction based on its good faith reliance upon such opinion or advice.
(F) The Trustee shall not be responsible for any recital
herein or in the Notes (except with respect to the certificate of the
Trustee endorsed on the Notes), or for the investment of moneys or for
the filing or refiling of this Indenture, or the filing of financing
statements, or for the validity of the execution by the Corporation of
this Indenture, or of any Supplemental Indenture or instrument of
further assurance, or for the sufficiency of the security for the Notes
issued hereunder or intended to be secured hereby.
(G) The Trustee shall not be accountable for the use or
application by the Corporation of any of the Notes or the proceeds
thereof or for the use or application of any money paid over by the
Trustee in accordance with the provisions of this Indenture or for the
use and application of money received by any Paying Agent. The Trustee
may become the Holder of Notes secured hereby with the same rights it
would have if not Trustee.
(H) The Trustee shall be protected in acting upon any notice,
order, requisition, request, consent, certificate, order, opinion
(including an opinion of Counsel), affidavit, letter, telegram or other
paper or document in good faith deemed by it to be genuine and correct
and to have been signed or sent by the proper person or persons. Any
action taken by the Trustee pursuant to this Indenture upon the request
or authority or consent of any person who at the time of making such
request or giving such authority or consent is the Holder of any Note
shall be conclusive and binding upon all future Holders of the same
Note and Notes issued in exchange therefor or in place thereof.
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(I) As to the existence or nonexistence of any fact or as to
the sufficiency or authenticity of any instrument, paper or proceeding,
the Trustee shall be entitled to rely upon a Corporation Certificate as
sufficient evidence of the facts stated therein.
(J) At any and all reasonable times, the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect all books,
papers and records of the Corporation pertaining to the Program, and to
take such memoranda from and in regard thereto as may be desired.
(K) The Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or
otherwise in respect of the premises.
(L) Notwithstanding anything elsewhere in this Indenture
contained, the Trustee, in respect to the authentication of any Notes,
the withdrawal of any cash or any action whatsoever within the purview
of this Indenture, and any Authenticating Agent, in respect of the
authentication of Notes, shall have the right, but shall not be
required, to demand any showings, certificates, opinions (including
opinions of Counsel), appraisals or other information, or corporate
action or evidence thereof, in addition to that by the terms hereof
required as a condition of such action by the Trustee or the
Authenticating Agent, as the case may be, deemed desirable for the
purpose of establishing the right of the Corporation to the
authentication of any Notes, the withdrawal of any cash, or the taking
of any other action by the Trustee or the Authenticating Agent, as the
case may be.
(M) Before taking any action hereunder requested by
Noteholders or by any Other Beneficiary, the Trustee may require that
it be furnished an indemnity bond or other indemnity satisfactory to it
for the reimbursement of all expenses to which it may be put and to
protect it against all liability, except liability which results from
the negligence or willful misconduct of the Trustee, by reason of any
action so taken by the Trustee.
(N) The Trustee shall periodically file Uniform Commercial
Code continuation statements and take such other actions described in
Section 4.11 hereof as required to maintain and continue the perfection
of any security interests granted by the Corporation as debtor to the
Trustee as secured party hereunder.
(O) So long as the Trustee shall act as holder of Financed
Student Loans, the Trustee (i) shall, upon receipt of a Corporation
Order, take all necessary actions to receive all benefits to which such
Financed Student Loans are entitled under the provisions of the Higher
Education Act and each Alternative Loan Program; provided, however,
that the Trustee shall not be required to take any actions that may be
performed by the Corporation or by a Servicer; (ii) shall not consent
to any amendment to any Guarantee Agreement relating to any Financed
FFELP Loans prior to receiving a Corporation Consent to such amendment
(unless such amendment is required by the Higher Education Act); and
(iii) shall, upon receipt of a Corporation Order, take all reasonable
steps, actions and proceedings necessary or appropriate for the
enforcement of each Guarantee Agreement.
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Section 7.2. Fees, Charges and Expenses of the Trustee, Paying Agents,
Note Registrar, Authenticating Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers. The Trustee and each Paying
Agent, Note Registrar, Authenticating Agent, Deposit Agent, Remarketing Agent,
Depositary, Auction Agent and Broker-Dealer shall be entitled to payment and/or
reimbursement for reasonable fees for services rendered hereunder and all
advances, legal fees and other expenses reasonably and necessarily made or
incurred by it in and about the execution of the trusts created by this
Indenture and in and about the exercise and performance of the powers and duties
of the Trustee and each Paying Agent, Note Registrar, Authenticating Agent,
Deposit Agent, Remarketing Agent, Depositary, Auction Agent and Broker-Dealer
hereunder and for the reasonable and necessary costs and expenses incurred in
defending any liability in the premises of any character whatsoever (unless such
liability is adjudicated to have resulted from the negligence or willful
misconduct of the Trustee, the Paying Agent, the Note Registrar, the
Authenticating Agent, the Deposit Agent, the Remarketing Agent, the Depositary,
the Auction Agent or the Broker-Dealer); provided that any moneys or Investment
Securities held pursuant to Section 11.1 hereof with respect to Notes no longer
deemed Outstanding hereunder, shall not be available for, nor be applied to, the
payment of any such fees, advances, costs or expenses.
Section 7.3. Notice to Beneficiaries if Default Occurs. The Trustee
shall give to all Beneficiaries, in the manner provided in Section 13.4 hereof,
notice of all Events of Default, and of all events which, with the passage of
time or the giving of notice, or both, would become an Event of Default, known
to the Trustee, within ninety (90) days after the occurrence of such Event of
Default or other event unless such Event of Default or other event shall have
been cured before the giving of such notice; provided that, except in the case
of Events of Default in the payment of the principal of, premium, if any, or
interest on any of the Notes, the Trustee shall be protected in withholding such
notice if and so long as a trust committee of the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Beneficiaries.
Section 7.4. Intervention by Trustee. In any judicial proceeding to
which the Corporation is a party and which in the opinion of the Trustee and its
Counsel has a substantial bearing on the interest of the Beneficiaries, the
Trustee may intervene on behalf of Beneficiaries and shall do so if requested in
writing by the Holders of at least twenty-five percent (25%) of the aggregate
Principal Amount of the Outstanding Notes or any Other Beneficiary. The rights
and obligations of the Trustee under this Section 7.4 are subject to the
approval of a court of competent jurisdiction in the premises.
Section 7.5. Successor Trustee, Paying Agents, Authenticating Agents,
Deposit Agents and Depositaries. Any corporation, association or agency into
which the Trustee and any Paying Agent, any Authenticating Agent, any Deposit
Agent or any Depositary may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor trustee, paying
agent, note registrar, authenticating agent, deposit agent or depositary
hereunder and vested with all of the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution
or
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filing of any instrument or any further act, deed or conveyance on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided that no such merger, conversion or consolidation shall relieve the
Trustee of its obligation to comply with Section 7.13 hereof.
Section 7.6. Resignation by Trustee, Paying Agents, Authenticating
Agents, Deposit Agents and Depositaries. The Trustee, any Paying Agent, any
Authenticating Agent, any Deposit Agent and any Depositary may at any time
resign from the trusts and be discharged of the duties and obligations hereby
created by giving sixty (60) days' written notice to the Corporation and, in the
case of the Trustee, a Paying Agent, an Authenticating Agent or a Depositary, by
first-class mail to all Noteholders and Other Beneficiaries and such resignation
shall take effect upon the appointment of a successor trustee, paying agent,
authenticating agent or depositary. No such resignation of the Trustee shall
become effective until the acceptance of appointment by a successor trustee
under Section 7.8 hereof. Upon the appointment and acceptance of a successor
trustee, authenticating agent, paying agent, deposit agent or depositary, the
Trustee shall promptly cause written notice of such appointment to be given to
all Noteholders and Other Beneficiaries in the manner provided in Section 13.4
hereof, which notice shall include the address of the Principal Office of such
successor. If an instrument of acceptance by a successor trustee, paying agent,
authenticating agent, deposit agent or depositary shall not have been delivered
to the resigning Trustee, Paying Agent, Authenticating Agent, Deposit Agent or
Depositary within sixty (60) days after the giving of such notice of
resignation, the resigning Trustee, Paying Agent, Authenticating Agent, Deposit
Agent or Depositary may petition any court of competent jurisdiction for the
appointment of a successor and any attorneys' fees incurred in connection with
any such petition shall be payable by the Corporation.
Section 7.7. Removal of Trustee. The Trustee shall be removed by the
Corporation if at any time so requested by an instrument or concurrent
instruments in writing, filed with the Trustee and the Corporation, and signed
by the Holders of a majority in Principal Amount of the Notes then Outstanding
or their attorneys-in-fact duly authorized, excluding any Notes held by or for
the account of the Corporation. Notwithstanding the foregoing, the Trustee may
not be removed during the existence of an Event of Default. No such removal of
the Trustee shall become effective until the acceptance of appointment by a
successor trustee under Section 7.8 hereof.
Section 7.8. Appointment of Successor Trustee. In case the Trustee
shall be dissolved, fail to comply with Section 7.13 hereof or otherwise become
incapable of acting hereunder, or in case it shall be taken under the control of
any public officer or officers, or of a receiver appointed by a court, the
Corporation, by a Board Resolution, may remove the Trustee. If the Trustee fails
to comply with Section 7.13 hereof, any Noteholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee. No resignation or removal of the Trustee, and no appointment
of a successor trustee, pursuant to the provisions of this Article Seven shall
become effective until the acceptance of appointment by the successor trustee
under Section 7.9 hereof. If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Corporation, by a Board Resolution, shall promptly appoint a
successor trustee. If, within one (1) year of such resignation, removal or
incapability, or the occurrence of such vacancy, the
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Holders of a majority in aggregate Principal Amount of the then Outstanding
Notes, by an instrument or concurrent instruments in writing signed by such
Holders, or by their attorney-in-fact duly authorized, appoint a successor, such
successor shall, upon its acceptance of such appointment, supersede the
successor appointed by the Corporation. If no successor trustee has been
appointed and accepted appointment as herein provided after sixty (60) days from
the mailing of notice of resignation by the Trustee under Section 7.6 hereof, or
from the date the Trustee is removed or otherwise incapable of acting hereunder,
any Beneficiary may petition a court of competent jurisdiction to appoint a
successor trustee. No appointment of a successor Trustee shall be effective
without the written consent of all Other Beneficiaries, which consent shall not
be unreasonably withheld.
The Corporation shall promptly notify any Paying Agent, Authenticating
Agent, Deposit Agent, Remarketing Agent and Depositary as to the appointment of
any successor trustee and shall promptly cause written notice of such
appointment to be given to all Noteholders and Other Beneficiaries in the manner
provided in Section 13.4 hereof, which notice shall include the address of the
Principal Office of the successor trustee.
Section 7.9. Concerning any Successor Trustee. Every successor trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor,
and to the Corporation, an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, assignment or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, trusts, duties and obligations of its predecessor as trustee; but such
predecessor shall, nevertheless, on the written request of the Corporation, or
of its successor trustee, execute and deliver an instrument transferring to such
successor trustee all the estates, properties, rights, powers and trusts of such
predecessor hereunder, and every predecessor trustee shall deliver all
securities and moneys and Balances held by it as trustee hereunder to its
successor together with an accounting of the Balances held by it hereunder.
Should any instrument in writing from the Corporation be required by any
successor trustee for more fully and certainly vesting in such successor the
estates, rights, powers and duties hereby vested or intended to be vested in the
predecessor trustee, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the Corporation. The resignation of
any trustee and the instrument or instruments removing any trustee and
appointing a successor hereunder, together with all other instruments provided
for in this Article shall be forthwith filed and/or recorded by the successor
trustee in each recording office where this Indenture shall have been filed
and/or recorded.
Section 7.10. Trustee Protected in Relying Upon Resolutions, Etc. The
resolutions, orders, requisitions, opinions, certificates and other instruments
conforming to the requirements of this Indenture may be accepted by the Trustee
as conclusive evidence of the facts and conclusions stated therein and shall be
full warrant, protection and authority to the Trustee for the withdrawal of cash
hereunder.
Section 7.11. Successor Trustee as Custodian of Funds. In the event of
a change in the office of trustee the predecessor trustee which has resigned or
been removed shall cease to be custodian of the Funds and Accounts, and the
successor trustee shall be and become such custodian.
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Section 7.12. Co-Trustee. At any time or times, for the purpose of (a)
meeting any legal requirements of any state in which the Trustee determines it
necessary to take any action hereunder or (b) establishing the eligibility of
any Financed Student Loans for receipt of federal payments with respect thereto,
the Trustee shall have power to appoint, and, upon the request of the Trustee or
of the Holders of at least twenty-five percent (25%) in aggregate Principal
Amount of Notes Outstanding or of any Other Beneficiary, the Corporation shall
for such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint one
or more Persons approved by the Trustee either to act as co-trustee or
co-trustees, jointly with the Trustee of all or any part of the trust estate, or
to act as separate trustee or separate trustees of all or any part of the trust
estate, and to vest in such person or persons, in such capacity, such title to
the trust estate or any part thereof, and such rights, powers, duties, trusts or
obligations as the Trustee may consider necessary or desirable, subject to the
remaining provisions of this Section 7.12. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
Trustee under Section 7.13 hereof and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 7.8 hereof.
If the Corporation shall not have joined in such appointment within
fifteen (15) days after the receipt by it of a request so to do, or in case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have power to make such appointment.
The Corporation shall execute, acknowledge and deliver all such
instruments as may be required by any such co-trustee or separate trustee.
Every co-trustee or separate trustee shall, to the extent permitted by
law but to such extent only, be appointed subject to the following terms,
namely:
(A) The Notes shall be authenticated and delivered, and all
rights, powers, trusts, duties and obligations by this Indenture
conferred upon the Trustee in respect of the custody, control and
management of moneys, papers, securities and other personal property
shall be exercised solely by the Trustee.
(B) All rights, powers, trusts, duties and obligations
conferred or imposed upon the trustees shall be conferred or imposed
upon and exercised or performed by the Trustee, or by the Trustee and
such co-trustee or co-trustees or separate trustee or separate trustees
jointly, as shall be provided in the instrument appointing such
co-trustee or co-trustees or separate trustee or separate trustees,
except to the extent that, under the law of any jurisdiction in which
any particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such act or acts shall be performed by such co-trustee or co-trustees
or separate trustee or separate trustees.
(C) Any request in writing by the Trustee to any co-trustee or
separate trustee to take or to refrain from taking any action hereunder
shall be sufficient warrant for the taking, or the refraining from
taking, of such action by such co-trustee or separate trustee.
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(D) Any co-trustee or separate trustee may delegate to the
Trustee the exercise of any right, power, trust, duty or obligations,
discretionary or otherwise.
(E) The Trustee at any time, by any instrument in writing, may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section 7.12. Upon the request of the Trustee, the
Corporation shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal.
(F) No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
(G) Any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing delivered to the
Trustee shall be deemed to have been delivered to each such co-trustee
or separate trustee.
(H) Any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee hereunder
shall forthwith, so far as may be permitted by law, be turned over to
the Trustee.
Upon the acceptance in writing of such appointment by any such
co-trustee or separate trustee, it or he or she shall be vested with such title
to the trust estate or any part thereof, and with such rights, powers, duties or
obligations, as shall be specified in the instrument of appointment jointly with
the Trustee (except insofar as local law makes it necessary for any such
co-trustee or separate trustee to act alone) subject to all the terms of this
Indenture. Every such acceptance shall be filed with the Trustee. Any co-trustee
or separate trustee may, at any time by an instrument in writing, constitute the
Trustee, its or his attorney-in-fact and agent, with full power and authority to
do all acts and things and to exercise all discretion on its or his behalf and
in its or his name.
In case any co-trustee or separate trustee shall die, become incapable
of acting, resign or be removed, the title to the trust estate, and all rights,
powers, trusts, duties and obligations of said co-trustee or separate trustee
shall, so far as permitted by law, vest in and be exercised by the Trustee
unless and until a successor co-trustee or separate trustee shall be appointed
in the manner herein provided.
Section 7.13. Corporate Trustee Required; Eligibility;
Disqualification. There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state, authorized under such laws to exercise corporate
trust powers, and shall be an "eligible lender" under the Higher Education Act,
having a combined capital stock, capital surplus and undivided profits of at
least $25,000,000, subject to supervision or examination by a federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.13, the combined capital
stock, capital surplus and undivided profits of such
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corporation shall be deemed to be its combined capital stock, capital surplus
and undivided profits as set forth in its most recent report of condition so
published.
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a). The Trustee shall comply with TIA ss. 310(b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities of the Corporation are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
Section 7.14. Preferential Collection of Claims Against Corporation.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 7.15. Statement by Trustee of Funds and Accounts and Other
Matters. Not more than thirty (30) days after the close of each Fiscal Year the
Trustee shall furnish the Corporation and any Noteholder or Other Beneficiary
filing with the Trustee a written request for a copy, a statement setting forth
(to the extent applicable) in respect to such Fiscal Year, (a) all transactions
relating to the receipt, disbursement and application of all moneys received by
the Trustee pursuant to all terms of this Indenture, (b) the Balances held by
the Trustee and any Deposit Agent at the end of such Fiscal Year to the credit
of each Fund and Account, (c) a brief description of all moneys, Student Loans
and Investment Securities held by the Trustee and any Deposit Agent as part of
the Balance of each Fund and Account as of the end of such Fiscal Year, (d) the
Principal Amount of Notes of each series purchased by the Trustee during such
Fiscal Year from moneys available therefor in any Fund pursuant to the
provisions of this Indenture and the respective purchase price of such Notes,
(e) the Principal Amount of Notes of each series retired, at their Stated
Maturity or by redemption, during such Fiscal Year and the Redemption Prices
thereof, if any, and (f) any other information which the Corporation may
reasonably request.
In addition, the Trustee shall furnish the Corporation on the fifth day
of each calendar month a brief description of all moneys, Student Loans and
Investment Securities to the credit of each Fund and Account as of the last
Monthly Payment Date prior thereto.
Section 7.16. Trustee, Authenticating Agent, Note Registrar, Paying
Agents, Deposit Agents, Remarketing Agents, Depositaries, Auction Agents and
Broker-Dealers May Buy, Hold, Sell or Deal in Notes. The Trustee, the
Authenticating Agent, any Note Registrar, any Paying Agent, any Deposit Agent,
any Remarketing Agent, any Depositary, any Auction Agent or any Broker-Dealer
and its directors, officers, employees or agents may, in good faith, buy, sell,
own, hold and deal in any of the Notes and may join in any action which any
Holder of a Note may be entitled to take, with like effect as if such Trustee,
Authenticating Agent, Note Registrar, Paying Agent, Deposit Agent, Remarketing
Agent, Depositary, Auction Agent or Broker-Dealer were not the Trustee, the
Authenticating Agent, a Note Registrar, a Paying Agent, a Deposit Agent, a
Remarketing Agent, a Depositary, an Auction Agent or a Broker-Dealer, as
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the case may be, under this Indenture. However, the Trustee is required to
comply with Sections 7.13 and 7.14.
Section 7.17. Authenticating Agent and Paying Agents; Paying Agents To
Hold Moneys in Trust. Any Paying Agent shall be appointed by or pursuant to a
Supplemental Indenture providing for the issuance of such series of Notes. Each
Paying Agent shall hold in trust for the benefit of the Holders of the Notes and
the Trustee any sums held by such Paying Agent for the payment of the principal
of, premium, if any, and interest on and any Carry-Over Amounts (and accrued
interest thereon) with respect to the Notes. Anything in this paragraph to the
contrary notwithstanding, the Corporation may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture, or for any other
reason, cause to be paid to the Trustee all sums held in trust by any Paying
Agent hereunder as required by this paragraph, such sums to be held by the
Trustee upon the trusts herein contained, and such Paying Agent shall thereupon
be released from all further liability with respect to such sums.
Any Authenticating Agent shall be appointed by or pursuant to a
Supplemental Indenture providing for the issuance of such series of Notes. The
Authenticating Agent shall have the power to act in the receipt, authentication
and delivery of Notes in connection with transfers, exchanges and registrations
hereunder.
Each Authenticating Agent and Paying Agent other than the Trustee shall
designate its Principal Office and signify its acceptance of the duties and
obligations imposed upon it by this Indenture by executing and delivering to the
Corporation a written acceptance thereof under which, in the case of the Paying
Agent, the Paying Agent will agree particularly:
(1) to hold all sums held by it pursuant to this Indenture in
trust for the benefit of the Holders of the Notes until such sums shall
be paid to such Holders or otherwise disposed of as herein provided;
(2) at any time during the continuance of any Event of
Default, upon the written request of the Trustee, to forthwith pay to
the Trustee all sums so held in trust by such Paying Agent; and
(3) in the event of the resignation or removal of such Paying
Agent, pay over, assign and deliver any moneys, records or securities
held by it as Paying Agent to its successor or, if there be no
successor, to the Trustee.
No Paying Agent shall be obligated to expend its own funds in paying
Debt Service on, or Carry-Over Amounts (including accrued interest thereon) with
respect to, the Notes.
Section 7.18. Removal of Authenticating Agent and Paying Agents;
Successors. Any Authenticating Agent and any Paying Agent may be removed at any
time by an instrument filed with such Authenticating Agent or Paying Agent, as
the case may be, and the Trustee and signed by the Corporation. Any successor
authenticating agent or paying agent shall be appointed by the Corporation and
shall be a bank having trust powers or trust company duly
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organized under the laws of any state of the United States or a national banking
association having trust powers, having, in the case of a successor paying
agent, a capital stock and surplus aggregating at least $25,000,000, and, in the
case of a successor authenticating agent, its Principal Office for the
performance of its functions as Authenticating Agent under this Indenture in the
City of New York, New York, and willing and able to accept the office on
reasonable and customary terms and authorized by law to perform all the duties
imposed upon it by this Indenture and any Supplemental Indenture. Upon the
appointment and acceptance of a successor authenticating agent or paying agent,
the Corporation shall promptly give written notice of such appointment to the
Trustee and the Trustee shall promptly cause written notice thereof to be given
to all Beneficiaries in the manner provided in Section 13.4 hereof, which notice
shall include the address of the Principal Office of such successor.
In the event of the resignation or removal of any Authenticating Agent
or any Paying Agent, such Authenticating Agent or Paying Agent shall pay over,
assign and deliver any moneys, records or securities held by it as
Authenticating Agent (and Note Registrar, if appropriate) or Paying Agent, as
the case may be, to its successors or, if there be no successor, to the Trustee.
Section 7.19. Appointment and Qualifications of Deposit Agents. A. The
Corporation may, in a Supplemental Indenture, appoint one or more Deposit Agents
for any part or all of one or more of the following Funds: the Revenue Fund, the
Acquisition Fund or the Administration Fund. Each Deposit Agent shall signify
its acceptance of the duties imposed upon it hereunder by written acceptance
filed with the Corporation and the Trustee. Any Deposit Agent may be removed at
any time by the Corporation by Board Resolution and by instrument signed by an
Authorized Officer of the Corporation filed with such Deposit Agent.
B. Each Deposit Agent appointed by the Corporation shall be an
incorporated bank having trust powers or trust company organized under the laws
of the State, or a national banking association having trust powers, having its
principal office in the State of South Dakota and having a combined capital and
surplus of at least $5,000,000.
C. The Corporation will cause each Deposit Agent to execute and deliver
to the Trustee an instrument in which such Deposit Agent shall agree with the
Trustee that such Deposit Agent will
(1) hold all sums held by it pursuant to this Indenture in
trust for the benefit of the Beneficiaries until such sums shall be
paid to such Beneficiaries or otherwise disposed of as herein provided;
(2) at any time during the continuance of any Event of
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Deposit Agent; and
(3) in the event of the resignation or removal of such Deposit
Agent, pay over, assign and deliver any moneys or securities held by it
as Deposit Agent to its successor or, if there be no successor, to the
Trustee.
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D. The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Corporation Order direct any Deposit Agent to pay to the Trustee all sums held
in trust by such Deposit Agent such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by such Deposit Agent, and, upon
such payment by any Deposit Agent to the Trustee, such Deposit Agent shall be
released from all further liability with respect to such sums.
Section 7.20. Appointment and Qualifications of Depositaries. The
Corporation may, in a Supplemental Indenture, appoint a Depositary with respect
to one or more series of Notes. The Depositary shall, by entering into a
Depositary Agreement, designate to the Trustee its Principal Offices for the
purposes of its functions as Depositary and, if applicable, Authenticating Agent
and Note Registrar hereunder and signify its acceptance of the duties and
obligations imposed upon it hereunder (including, if applicable, those of
Authenticating Agent and Note Registrar) and under the Depositary Agreement, and
under which the Depositary will agree, particularly:
(a) to hold all Notes delivered to it hereunder in trust for
the benefit of the respective Noteholders which shall have so delivered
such Notes until moneys representing the purchase price of such Notes
shall have been delivered to or for the account of or to the order of
such Noteholders;
(b) to hold all moneys delivered to it hereunder for the
purchase of Notes in trust for the benefit of the person or entity
which shall have so delivered such moneys until the Notes purchased
with such moneys shall have been delivered to or for the account of
such person or entity; and
(c) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available
for inspection by the Corporation and the Trustee at all reasonable
times.
The Corporation shall cooperate with the Depositary and the Trustee to
cause the necessary arrangements to be made and to be thereafter continued
whereby funds from the sources specified herein will be made available for the
purchase of the Notes which are Deemed Tendered and whereby Notes, executed by
the Corporation and authenticated by the Trustee or the Authenticating Agent,
shall be made available to the Remarketing Agent, the Trustee or the Depositary
to the extent necessary for delivery pursuant the applicable provisions of the
related Supplemental Indenture.
The Depositary shall be a commercial bank or trust company duly
organized under the laws of the United States or any state or territory thereof,
having its Principal Office for the performance of its functions as Depositary
hereunder located in New York, New York, having a combined capital stock,
surplus and undivided profits of at least $100,000,000 and authorized by law to
perform all the duties imposed upon it by this Indenture (including, if
applicable, those of Authenticating Agent and Note Registrar) and the Depositary
Agreement. The Depositary may at any time resign and be discharged of the duties
and obligations created by this Indenture and the Depositary Agreement
(including such duties and obligations as Note
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Registrar and Authenticating Agent hereunder) by giving at least sixty (60)
days' notice to the Corporation, the Trustee and any related Credit Facility
Provider, provided that such resignation shall not be effective until the
appointment of a successor depositary by the Corporation. The Depositary may be
replaced at any time, at the direction of the Corporation, by an instrument,
signed by an Authorized Officer of the Corporation, filed with the Remarketing
Agent, the Depositary, the Trustee and any related Credit Facility Provider at
least sixty (60) days prior to the effective date of such replacement, provided
that such replacement shall not be effective until the appointment of a
successor depositary by the Corporation. Upon the appointment and acceptance of
a successor depositary, the Corporation shall promptly give written notice of
such appointment to the Trustee and the Trustee shall promptly cause written
notice thereof to be given to all Noteholders in the manner provided in Section
13.4 hereof, which notice shall include the address of the Principal Office of
such successor.
In the event of the resignation or removal of the Depositary, the
Depositary shall pay over, assign and deliver any moneys, Notes and records held
by it in such capacity (including any such moneys, Notes and records held by it
as Authenticating Agent and Note Registrar) to its successor or, if there be no
successor, to the Trustee.
In the event that the Depositary shall be removed or be dissolved, or
if the property or affairs of the Depositary shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Corporation shall not have
appointed its successor as Depositary, the Trustee, notwithstanding the
foregoing provisions of this Section 7.20, shall ipso facto be deemed to be the
Depositary for all purposes of this Indenture until the appointment by the
Corporation of the successor depositary, and the Trustee shall be required to
perform the functions of the Depositary (and, if applicable, of Note Registrar
and Authenticating Agent) as set forth in this Indenture and the Depositary
Agreement.
Section 7.21. Remarketing Agents. The Corporation may, in a
Supplemental Indenture, appoint a Remarketing Agent with respect to one or more
series of Notes. The Remarketing Agent shall designate its Principal Office and
signify its acceptance of the duties and obligations imposed upon it hereunder
by entering into a Remarketing Agreement under which the Remarketing Agent will
agree, particularly:
(a) to determine any variable interest rate in accordance with
the applicable provisions of the related Supplemental Indenture;
(b) to determine any fixed interest rate in accordance with
the applicable provisions of the related Supplemental Indenture;
(c) to hold all Notes delivered to it hereunder in trust for
the benefit of the respective Noteholders which shall have so delivered
such Notes until moneys representing the purchase price of such Notes
shall have been delivered to or for the account of or to the order of
such Noteholders;
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(d) to hold all moneys delivered to it hereunder for the
purchase of Notes in trust for the benefit of the person or entity
which shall have so delivered such moneys until the Notes purchased
with such moneys shall have been delivered to or for the account of
such person or entity; and
(e) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available
for inspection by the Corporation and the Trustee at all reasonable
times.
Section 7.22. Qualifications of Remarketing Agents. The Remarketing
Agent shall be a member of the National Association of Securities Dealers, Inc.,
have a capitalization of at least $50,000,000 and be authorized by law to
perform all the duties imposed upon it by this Indenture and the Remarketing
Agreement. The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture and the Remarketing Agreement
(i) by giving at least sixty (60) days' notice to the Corporation, the Trustee,
the Depositary and any related Credit Facility Provider, provided that such
resignation shall not be effective until a successor Remarketing Agent has been
appointed by the Corporation and any related Credit Facility Provider has
consented in writing thereto, which consent shall not be unreasonably withheld,
or (ii) by giving notice to the Corporation, the Trustee and the Depositary
under the circumstances set forth in the Remarketing Agreement. The Remarketing
Agent may be replaced at any time, at the direction of the Corporation, by an
instrument signed by an Authorized Officer of the Corporation, filed with the
Remarketing Agent, the Trustee, the Depositary and any related Credit Facility
Provider, at least sixty (60) days prior to the effective date of such
replacement, provided that such replacement shall not be effective until a
successor Remarketing Agent has been appointed by the Corporation and any
related Credit Facility Provider has consented in writing thereto, which consent
shall not be unreasonably withheld.
In the event of the resignation or removal of the Remarketing Agent,
the Remarketing Agent shall pay over, assign and deliver any moneys and Notes
held by it in such capacity to its successor or, if there be no successor, to
the Trustee.
In the event that the Remarketing Agent shall resign, be removed or be
dissolved, or if the property or affairs of the Remarketing Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and the Corporation shall
not have appointed its successor as Remarketing Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section 7.22,
shall ipso facto be deemed to be the Remarketing Agent for all purposes of this
Indenture until the appointment by the Corporation of the successor Remarketing
Agent; provided, however, that the Trustee, in its capacity as Remarketing
Agent, shall not be required to sell Notes or to determine the interest rate on
the Notes. Nothing in this Section shall be construed as conferring on the
Trustee additional duties other than as set forth herein.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
Section 8.1. Supplemental Indentures Not Requiring Consent of
Beneficiaries. The Corporation and the Trustee may, from time to time and at any
time, without the consent of, or notice to, any of the Noteholders or any Other
Beneficiary (except to the extent, if any, required pursuant to a Supplemental
Indenture authorizing the issuance of a series of Notes), and when so required
by this Indenture shall, enter into an indenture or indentures supplemental to
this Indenture as shall not be inconsistent with the terms and provisions hereof
(which Supplemental Indenture or Indentures shall thereafter form a part
hereof), so as to thereby (a) cure any ambiguity or formal defect or omission in
this Indenture or in any Supplemental Indenture, (b) grant to or confer upon the
Trustee for the benefit of the Beneficiaries any additional rights, remedies,
powers, authority or security that may lawfully be granted to or conferred upon
the Beneficiaries or the Trustee, (c) describe or identify more precisely any
part of the Trust Estate or subject additional revenues, properties or
collateral to the lien and pledge of this Indenture, (d) evidence the
appointment of a separate trustee or a co-trustee or the succession of a new
Trustee hereunder, (e) authorize issuance of a series of Notes, subject to the
requirements of Article Three hereof, (f) modify, eliminate and/or add to the
provisions of this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the Trust Indenture Act of 1939, as then
amended, or under any similar Federal statute enacted after December 1, 1999,
and to add to this Indenture such other provisions as may be expressly permitted
by said Trust Indenture Act of 1939, excluding, however, the provisions referred
to in Section 316(a)(2) of said Trust Indenture Act of 1939, (g) modify,
eliminate and/or add to the provisions of this Indenture to such extent as shall
be necessary or advisable in order to acquire Eligible Loans described in clause
(B) of the definition thereof (upon receipt by the Trustee from each Rating
Agency of written confirmation that the outstanding ratings on any of the
Unenhanced Outstanding Notes will not be reduced or withdrawn as a result of
such amendment or, if no Unenhanced Notes are then Outstanding, but Other
Obligations are Outstanding, the Other Beneficiaries holding such Outstanding
Other Obligations consent to the amendment of such assumptions, as evidenced in
writing to the Trustee by each such Other Beneficiary), (h) amend the
assumptions contained in the definition of "Cash Flow Projection" in Section 1.1
hereof (upon receipt by the Trustee from each Rating Agency of written
confirmation that the outstanding ratings on any of the Unenhanced Outstanding
Notes will not be reduced or withdrawn as a result of such amendment or, if no
Unenhanced Notes are then Outstanding, but Other Obligations are Outstanding,
the Other Beneficiaries holding such Outstanding Other Obligations consent to
the amendment of such assumptions, as evidenced in writing to the Trustee by
each such Other Beneficiary), (i) modify this Indenture (including deletions of
or changes to provisions of this Indenture or additions to this Indenture or any
combination of deletions, changes and additions) as required by any Credit
Facility Provider or Swap Counterparty, or otherwise necessary to give effect to
any Credit Enhancement Facility, Demand Purchase Agreement, Swap Agreement or
Swap Counterparty Guarantee authorized to be issued under Section 5.2 hereof, at
the time of issuance of a series of Notes to which such agreements relate, if
the Trustee shall have received written confirmation from each Rating Agency
that such modifications will not cause the outstanding rating assigned by such
Rating Agency to any of the Notes to be lowered, withdrawn or otherwise
impaired; provided that no such modifications shall
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be effective (1) if the consent of any Noteholders would be required therefor
under the proviso contained in Section 8.2 hereof and such consent has not been
obtained, or (2) the Trustee shall determine that such modifications are to the
prejudice of any Class C Noteholder or to any Other Beneficiary, or (j) make any
other change in this Indenture which, in the judgment of the Trustee, is not to
the prejudice of the Trustee or the Holders of any Notes or any Other
Beneficiary.
Section 8.2. Supplemental Indentures Requiring Consent of
Beneficiaries. Exclusive of Supplemental Indentures covered by Section 8.1
hereof and subject to the terms and provisions contained in this Section 8.2,
and not otherwise, the Trustee (upon receipt of an instrument evidencing the
consent to the below-mentioned Supplemental Indenture by: (i) if they are
affected thereby, the Holders of not less than two-thirds of the aggregate
Principal Amount of the Outstanding Class A Notes not held by the Corporation or
a related person, (ii) if they are affected thereby, the Holders of not less
than two-thirds of the aggregate Principal Amount of the Outstanding Class B
Notes not held by the Corporation or a related person, and (iii) each other
Person which must consent to such Supplemental Indenture as provided in any then
outstanding Supplemental Indenture authorizing the issuance of a series of
Notes) shall join with the Corporation in the execution of such other indenture
or indentures supplemental hereto as shall be deemed necessary and desirable for
the purpose of modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this Indenture;
provided, however, that nothing contained in this Article Eight shall permit or
be construed as permitting without the consent of the Holder of each Note and
each Other Beneficiary which would be affected thereby (a) an extension of the
maturity of the principal of or the interest on any Note, whether at the Stated
Maturity thereof, on a Sinking Fund Payment Date or otherwise, or (b) a
reduction in the Principal Amount, Redemption Price or purchase price of any
Note or the rate of interest thereon, or (c) a privilege or priority of any
Senior Obligation over any other Senior Obligation, (d) a privilege or priority
of any Subordinate Obligation over any other Subordinate Obligation, or (e) a
privilege or priority of any Class C Note or Class C Notes over any other Class
C Note or Class C Notes, or (f) a privilege of any Class A Notes over any Class
B Notes or Class C Notes, or of any Class B Notes over any Class C Notes, other
than as provided herein, or (g) the surrendering of a privilege or a priority
granted hereby if, in the judgment of the Trustee, to the detriment of another
Beneficiary hereunder, or (h) a reduction or an increase in the aggregate
Principal Amount of the Notes required for consent to such Supplemental
Indenture, or (i) the creation of any lien ranking prior to or on a parity with
the lien of this Indenture on the Trust Estate or any part thereof, except as
hereinbefore expressly permitted, or (j) any Beneficiary to be deprived of the
lien hereby created on the rights, title, interest, privileges, revenues, moneys
and securities pledged hereunder, or (k) the modification of any of the
provisions of this Section 8.2, or (l) the modification of any provision of a
Supplemental Indenture which states that it may not be modified without the
consent of the Holders of Notes issued pursuant thereto or any Notes of the same
class or any Beneficiary that has provided a Credit Enhancement Facility, Demand
Purchase Agreement or Swap Agreement of such class.
For purposes of this Indenture, Notes are deemed "affected" by an
amendment if such amendment adversely affects or diminishes the rights of the
Holders thereof to be assured of the payment of principal of, premium, if any,
and interest on and any Carry-Over Amount (and accrued interest thereon) with
respect to such Notes, taking into account the priorities between classes of
Notes theretofore prescribed hereby. The Trustee may in its discretion determine
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whether any Notes would be affected by any amendment and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered under this Indenture. The Trustee shall
not be liable for any such determination made in good faith.
If at any time the Corporation shall request the Trustee to enter into
any such Supplemental Indenture for any of the purposes of this Section, the
Trustee shall, upon being satisfactorily indemnified with respect to expenses,
cause notice of the proposed execution of such Supplemental Indenture to be
mailed to each Holder of an Outstanding Note in accordance with the provisions
of Section 13.4 hereof and to each Other Beneficiary. Such notice shall briefly
set forth the nature of the proposed Supplemental Indenture and shall state that
copies thereof are on file at the Principal Office of the Trustee for inspection
by all Beneficiaries. The Trustee shall not, however, be subject to any
liability to any Noteholder or any Other Beneficiary by reason of its failure to
mail such notice, and any such failure shall not affect the validity of such
Supplemental Indenture when consented to and approved as provided in this
Section 8.2. If, at the time of the execution of any such Supplemental
Indenture, the Holders of Notes and each other Beneficiary shall have consented
to and approved the execution thereof as herein provided, no Beneficiary shall
have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the
execution thereof, or to enjoin or restrain the Trustee or the Corporation from
executing the same or from taking any action pursuant to the provisions thereof.
Upon the execution of any such Supplemental Indenture as in this Section 8.2
permitted and provided this Indenture shall be and be deemed to be modified and
amended in accordance therewith.
Section 8.3. Rights of Trustee. If, in the opinion of the Trustee, any
Supplemental Indenture provided for in this Article Eight adversely affects the
rights, duties or immunities of the Trustee under this Indenture or otherwise,
the Trustee may, in its discretion, decline to execute such Supplemental
Indenture, except to the extent that this may be required in the case of a
Supplemental Indenture entered into under Section 8.1 hereof. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon, an opinion
of its Counsel as conclusive evidence that any such Supplemental Indenture
conforms to the requirements of this Indenture.
Section 8.4. Rating Agency Confirmation Required Prior to Execution of
Supplemental Indenture. No Supplemental Indenture shall be executed unless,
prior to the execution thereof, the Trustee shall have received written evidence
that the Rating Agency Condition has been satisfied.
Section 8.5. Consent of Depositaries. So long as any Depositary
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Depositary created by this
Indenture or the Depositary Agreement (including, if applicable, such duties and
obligations as Note Registrar and Authenticating Agent hereunder) shall become
effective unless and until delivery to the Trustee of a written consent of the
Depositary to such Supplemental Indenture, and (ii) the Trustee shall promptly
furnish to the Depositary a copy of each Supplemental Indenture.
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Section 8.6. Consent of Remarketing Agents. So long as any Remarketing
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Remarketing Agent created by
this Indenture or the Remarketing Agreement shall become effective unless and
until delivery to the Trustee of a written consent of the Remarketing Agent to
such Supplemental Indenture, and (ii) the Trustee shall promptly furnish to the
Remarketing Agent a copy of each Supplemental Indenture.
Section 8.7. Consent of Auction Agents. So long as any Auction Agent
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Auction Agent created by this
Indenture or the Auction Agent Agreement shall become effective unless and until
delivery to the Trustee of a written consent of the Auction Agent to such
Supplemental Indenture, and (ii) the Trustee shall promptly furnish to the
Auction Agent a copy of each Supplemental Indenture.
Section 8.8. Consent of Broker-Dealers. So long as any Broker-Dealer
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Broker-Dealer created by this
Indenture or the Broker-Dealer Agreement shall become effective unless and until
delivery to the Trustee of a written consent of the Broker-Dealer to such
Supplemental Indenture, and (ii) the Trustee shall promptly furnish to the
Broker-Dealer a copy of each Supplemental Indenture.
Section 8.9. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article VIII 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.
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ARTICLE NINE
NOTEHOLDERS' MEETINGS
Section 9.1. Purposes for Which Noteholders' Meetings May Be Called. A
meeting of Noteholders may be called at any time and from time to time pursuant
to this Article Nine for any of the following purposes:
A. to give any notice to the Trustee or the Corporation, or to
give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action
authorized to be taken by Noteholders pursuant to Article Six hereof;
B. to remove the Trustee and appoint a successor trustee
pursuant to Article Seven hereof;
C. to consent to the execution of any Supplemental Indenture
pursuant to Article Eight hereof; or
D. to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate Principal Amount of
the Notes under any other provision of this Indenture or under
applicable law.
Section 9.2. Place of Meetings of Noteholders. Meetings of Noteholders
may be held at such place or places as the Trustee or, in case of its failure to
act, the Corporation or the Noteholders calling the meeting, shall from time to
time determine.
Section 9.3. Call and Notice of Noteholders' Meetings.
A. The Trustee may at any time call a meeting of Noteholders to be held
at such time and at such place as the Trustee shall determine. Notice of every
meeting of Noteholders, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be
mailed to each Noteholder in accordance with the provisions of Section 13.4
hereof and to each Other Beneficiary not less than twenty (20) nor more than one
hundred eighty (180) days prior to the date fixed for the meeting. Any failure
of the Trustee to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such meeting.
B. In case at any time the Corporation, pursuant to a Corporation
Request, the Holders of at least ten percent (10%) in aggregate Principal Amount
of the Notes then Outstanding or any Other Beneficiary, shall have requested the
Trustee to call a meeting of the Noteholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the first notice of such meeting within twenty
days after receipt of such request, then the Corporation, the Holders of Notes
in the amount above specified or such Other Beneficiary may determine the time,
place and location for
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such meeting and may call such meeting to take any action authorized in Section
9.1 hereof by giving notice thereof as provided in subsection A of this Section
9.3.
Section 9.4. Persons Entitled To Vote at Noteholders' Meetings. To be
entitled to vote at any meeting of Noteholders, a person shall be (i) a Holder
of one or more Notes, or (ii) a person appointed by an instrument in writing as
proxy for a Holder or Holders of Notes by such Holder or Holders. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel, any representatives
of any Other Beneficiary and their counsel and any representatives of the
Corporation and its counsel.
Section 9.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
A. Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Noteholders in regard to proof of the ownership of Notes and of the appointment
of proxies and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Notes shall be proved in the manner specified
in Section 13.1 hereof and the appointment of any proxy shall be proved in the
manner specified in Section 13.1 hereof or by having the signature of the person
executing the proxy witnessed or guaranteed by any bank, banker or trust
company. Such regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 13.1 hereof or other proof.
B. The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Noteholders or the Corporation as provided in subsection B of Section 9.3
hereof, in which case the Noteholders calling the meeting or the Corporation
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Holders of a
majority in aggregate Principal Amount of the Notes represented at the meeting
and entitled to vote.
C. At any meeting each Noteholder or proxy shall be entitled to one
vote for each $1.00 Principal Amount of Outstanding Notes held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not Outstanding and ruled by the chairman of
the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Noteholder or proxy.
D. At any meeting of Noteholders, the presence of persons holding or
representing Notes in an aggregate Principal Amount sufficient under the
appropriate provision of this Indenture to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meeting of Noteholders duly called pursuant to Section 9.3 hereof may be
adjourned from time to time by vote of the Holders (or proxies for the Holders)
of
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a majority in aggregate Principal Amount of the Notes represented at the meeting
and entitled to vote, whether or not a quorum shall be present; and the meeting
may be held as so adjourned without further notice.
Section 9.6. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of Noteholders shall be by written
ballots on which shall be subscribed the signatures of the Holders of Notes or
of their representatives by proxy and the serial number or numbers of the Notes
held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting of
Noteholders shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published or mailed as provided in Section 9.3
hereof. Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Corporation and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
Section 9.7. Revocation by Noteholders. At any time prior to (but not
after) the evidencing to the Trustee, in the manner provided in Section 13.1
hereof, of the taking of any action by the Holders of the percentage in
aggregate Principal Amount of the Notes specified in this Indenture in
connection with such action, any Holder of a Note, the serial number of which is
included in the Note, the Holders of which have consented to such action may, by
filing written notice with the Trustee at its Principal Office and upon proof of
holding as provided in Section 13.1 hereof, revoke such consent so far as
concerns such Note. Except as aforesaid any such consent given by the Holder of
any Note shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Note and of any Note issued in exchange therefor or
in lieu thereof, irrespective of whether or not any notation in regard thereto
is made upon such Note. Any action taken by the Holders of the percentage in
aggregate Principal Amount of the Notes specified in this Indenture in
connection with such action shall be conclusively binding upon the Corporation,
the Trustee and the Holders of all the Notes.
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ARTICLE TEN
REDEMPTION AND PREPAYMENT
Section 10.1. Right of Redemption and Prepayment. The Notes of any
series are subject to redemption and prepayment as provided in this Article Ten
and in the Supplemental Indenture creating such series.
Notes which are redeemable or may be prepaid before their Stated
Maturity shall be redeemed or prepaid in accordance with their terms, this
Indenture and (except as otherwise provided with respect to the Notes of any
particular series by the provisions of the Supplemental Indenture creating such
series) in accordance with this Article Ten.
Section 10.2. Election To Redeem, Prepay or Purchase; Notice to
Trustee; Senior Asset Requirement. The election of the Corporation to redeem or
prepay any Notes or cause any Notes then subject to redemption to be purchased
by the Trustee (other than on a Purchase Date or Mandatory Tender Date) shall be
evidenced by a Corporation Order, received by the Trustee no later than the
sixtieth (60th) day prior to the applicable Redemption Date, Prepayment Date or
such other date prior to the applicable Redemption Date or Prepayment Date
established with respect to a series of Notes in the Supplemental Indenture
authorizing the issuance of the Notes of such series, stating the Redemption
Date or Prepayment Date, as the case may be, the Principal Amount, the series of
Notes, and, if applicable, the Stated Maturity within a series, to be redeemed
or prepaid.
Notwithstanding any provision hereof to the contrary but apart from the
redemption of Notes which are no longer Outstanding by reason of Section 11.1
hereof or the redemption of Class A Notes on a Sinking Fund Payment Date, no
redemption, prepayment or purchase (other than on a Purchase Date or Mandatory
Tender Date) of Notes by the Trustee shall be effected hereunder unless prior to
the Trustee giving notice of redemption, transferring moneys to the Retirement
Account to make such prepayment or soliciting such purchase, the Corporation
furnishes the Trustee a Corporation Certificate to the effect that, as of the
date Notes are to be selected for redemption or purchase or such determination
to prepay is made, (1) if Class A Notes are to be redeemed, prepaid or
purchased, either (A) after giving effect to such redemption, prepayment or
purchase, the Senior Asset Requirement will be met, or (B) (i) prior to such
redemption, prepayment or purchase, the Senior Asset Requirement was not being
met, (ii) no Class B Notes or Class C Notes will be redeemed on the Redemption
Date, prepaid on the Prepayment Date or purchased on the purchase date for the
Class A Notes then proposed to be redeemed, prepaid or purchased, and (iii)
after giving effect to such redemption, prepayment or purchase, the Senior
Percentage will be greater than it would have been without such redemption,
prepayment or purchase; (2) if Class B Notes are to be redeemed, prepaid or
purchased, after giving effect to such redemption, prepayment or purchase, the
Senior Asset Requirement will be met; and (3) if Class C Notes are to be
redeemed, prepaid or purchased, after giving effect to such redemption,
prepayment or purchase, the Senior Asset Requirement will be met and there shall
be no deficiency then existing in the Note Fund, the Reserve Fund or the
Indemnification Fund. Such Notes may be redeemed on the Redemption Date, prepaid
on the Prepayment Date or purchased on the purchase date therefor if the
foregoing conditions are met on the date such
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Notes are selected for redemption or purchase or as of the date on which moneys
are transferred to the Retirement Account to make any prepayment, whether or not
such conditions are met on the Redemption Date, the Prepayment Date or the date
of purchase. Any election to redeem Notes of a series may also be conditioned
upon such additional requirements as may be set forth in the Supplemental
Indenture authorizing the issuance of such Notes.
Section 10.3. Selection by Trustee of Notes To Be Redeemed. Except as
may be otherwise specified in a Supplemental Indenture with respect to a series
of Notes thereby created, if less than all of the Outstanding Notes of any
series are to be redeemed, the particular Notes to be redeemed shall be selected
by the Trustee from the Outstanding Notes of that series not previously called
for redemption so that, to the maximum extent possible taking into account
redemption of Notes in $5,000 increments approximately equal percentages of each
Stated Maturity of Notes of such series will be redeemed.
If less than all Notes of a series and a Stated Maturity are to be
redeemed, the Trustee shall select by lot or in such other manner as the Trustee
shall deem fair and appropriate the particular Notes of such Stated Maturity and
series to be redeemed. The Trustee may provide for the selection for redemption
of portions of the principal of Notes in the denomination larger than $5,000 or
the smallest authorized denomination of the Notes of that series or an integral
multiple thereof.
The Trustee shall promptly notify the Corporation and any Paying Agent
in writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the Principal Amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 10.4. Notice of Redemption. Except as otherwise provided with
respect to the Notes of any particular series by the provisions of the
Supplemental Indenture creating such series, notice of redemption shall be given
by first-class mail, postage prepaid, mailed not more than sixty (60) days nor
less than thirty (30) days prior to the Redemption Date to each Holder of Notes
to be redeemed at the address of such Holder appearing in the Note Register; but
neither failure to give such notice nor any defect in any notice so given shall
affect the validity of the proceedings for redemption of any Note not affected
by such failure or defect.
In addition to the notice prescribed by the foregoing paragraph, the
Trustee shall also give notice of the redemption of any Note or Notes or
portions thereof at least thirty (30) days before the Redemption Date by
certified mail or telecopy to all registered securities depositories then in the
business of holding substantial amounts of obligations of the character of the
Notes (such depositories now being The Depository Trust Company, of New York,
New York; Midwest Securities Trust Company, of Chicago, Illinois; and
Philadelphia Depository Trust Company, of Philadelphia, Pennsylvania) and to two
(2) or more national information services that disseminate information regarding
municipal bond redemptions; provided that any
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defect in or any failure to give any notice of redemption prescribed by this
paragraph shall not affect the validity of the proceedings for the redemption of
any Note.
All notices of redemption shall state:
a. the Redemption Date,
b. the Redemption Price,
c. the name (including series designation), Stated Maturity
and CUSIP numbers of the Notes to be redeemed, the Principal Amount of
Notes of each series to be redeemed, and, if less than all outstanding
Notes of a series are to be redeemed, the identification (and, in the
case of partial redemption, the respective Principal Amounts) of the
Notes of each series to be redeemed,
d. that, on the Redemption Date, the Redemption Price of and
accrued interest on each such Note will become due and payable and that
interest on each such Note shall cease to accrue on and after such
date,
e. the place or places where such Notes are to be surrendered
for payment of the Redemption Price thereof and accrued interest
thereon, and
f. if it be the case, that such Notes are to be redeemed by
the application of certain specified trust moneys and for certain
specified reasons.
Within sixty (60) days after any Redemption Date, a second notice of
redemption shall be given, in the manner described above, to the Holder of any
Note that was not presented for redemption within thirty (30) days after the
Redemption Date.
Section 10.5. Notes Payable on Redemption Date and Sinking Fund Payment
Date. Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price specified plus accrued interest thereon to the Redemption Date and on and
after such date (unless the Corporation shall default in the payment of the
Redemption Price and accrued interest) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with such notice,
such Note shall be paid at the Redemption Price thereof plus (unless the
Redemption Date is a regularly scheduled Interest Payment Date) accrued interest
to the Redemption Date. Installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall continue to be payable to the applicable
Noteholder.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption Price and, to the extent lawful, interest
thereon shall, until paid, bear interest from the Redemption Date at the rate
borne by the Note.
Section 10.6. Notes Redeemed or Prepaid in Part. Any Note which is to
be redeemed only in part shall be surrendered to the Paying Agent (with, if the
Paying Agent so
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requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Paying Agent duly executed by, the Holder thereof or his
attorney duly authorized in writing) and the appropriate officers of the
Corporation shall execute and the Trustee or an Authenticating Agent shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes of the same series, of any authorized denomination or
denominations, having the same Stated Maturity and interest rate as requested by
such Holder, in aggregate Principal Amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
Any Note which is to be prepaid only in part shall remain Outstanding
in the then current Principal Amount. The Trustee shall retain a record of the
Principal Amount of each Note any portion of the principal of which has been
prepaid in part and shall give the Note Registrar (if other than the Trustee)
prompt written notice of the current Principal Amount of each such Note as of
the end of each calendar month.
Section 10.7. Purchase of Notes. The Corporation may at any time, but
subject to Section 10.2 hereof, authorize and direct the Trustee to purchase
Notes in the open market out of any funds available for such purpose, such
purchases to be made at a price not in excess of the amount specified in this
Indenture or, if no amount is specified, the Principal Amount thereof plus
accrued interest and any applicable redemption premium. In addition, the
Corporation may, from time to time, direct the Trustee to request the submission
of tenders following published notice requesting such submission prior to making
the purchases authorized pursuant to this Section 10.7. The Corporation may
specify the maximum and minimum period of time which shall transpire between the
date upon which such notice is to be given and the date upon which such tenders
are to be accepted or may authorize the Trustee to determine the same in its
discretion. No tenders shall be considered or accepted at any price exceeding
the maximum price specified by the Corporation for the purchase of Notes. The
Trustee shall accept bids with the lowest price and, in the event the moneys
available for purchase pursuant to such tenders are not sufficient to permit
acceptance of all tenders and if there shall be tenders at an equal price above
the amounts of moneys available for purchase, then the Trustee shall, determine
in its discretion, the Notes tendered which shall be purchased. All Notes
purchased by the Trustee pursuant to this Section 10.7 shall be canceled and not
reissued.
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ARTICLE ELEVEN
DEFEASANCE; MONEYS HELD FOR
PAYMENT OF DEFEASED NOTES
Section 11.1. Discharge of Liens and Pledges; Notes No Longer
Outstanding and Deemed To Be Paid Hereunder. The obligations of the Corporation
under this Indenture, and the liens, pledges, charges, trusts, covenants and
agreements of the Corporation herein made or provided for, shall be fully
discharged and satisfied as to any Note and such Note shall no longer be deemed
to be Outstanding hereunder:
(i) when such Note shall have been canceled, or shall have
been purchased by the Trustee from moneys held by it under this
Indenture; or
(ii) as to any Note not canceled or so purchased, when payment
of the principal of and the applicable redemption premium, if any, on
such Note, plus interest on such principal to the due date thereof
(whether such due date be by reason of Stated Maturity or upon
redemption or prepayment, or otherwise), either (a) shall have been
made or caused to be made in accordance with the terms hereof, or (b)
shall have been provided for by irrevocably depositing with the Trustee
and irrevocably appropriating and setting aside exclusively for such
payment, (1) moneys sufficient to make such payment or (2) Government
Obligations maturing as to principal and interest in such amount and at
such times as will ensure the availability of sufficient moneys to make
such payment and all necessary and proper fees, compensation and
expenses of the Trustee, any Deposit Agents, any Remarketing Agents,
any Depositaries, any Auction Agents, any Broker-Dealers, any
Authenticating Agents, the Note Registrar and any Paying Agents
pertaining to the Note with respect to which such deposit is made shall
have been paid or the payment thereof provided for to the satisfaction
of the Trustee, said Deposit Agents, said Remarketing Agents, said
Depositaries, said Auction Agents, said Broker-Dealers, said
Authenticating Agents, said Note Registrar and said Paying Agents.
Any deposit under the preceding clause (b) shall be accompanied by a Corporation
Certificate certifying that the moneys and Government Obligations so
appropriated and set aside are sufficient, and will mature as needed, to pay the
principal, premium, if any, and interest due on the Note with respect to which
such deposit has been made on the Stated Maturity or Redemption Date thereof and
on each Interest Payment Date on and prior to such Stated Maturity or Redemption
Date. At such time as a Note shall be deemed to be no longer Outstanding
hereunder, as aforesaid, such Note shall cease to draw interest from the due
date thereof (whether such due date be by reason of maturity, or upon redemption
or prepayment or by declaration as aforesaid, or otherwise) and, except for the
purposes of any such payment from such moneys or Investment Securities, shall no
longer be secured by or entitled to the benefits of this Indenture.
Notwithstanding the foregoing, (A) in the case of Notes which by their
terms may be redeemed or otherwise prepaid prior to their Stated Maturities, no
deposit under clause (b) of subparagraph (ii) above shall constitute such
payment, discharge and satisfaction as aforesaid, as to all such Notes which are
to be redeemed prior to their respective Stated Maturities, until
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proper notice of such redemption shall have been previously given in accordance
with Section 10.4 hereof or provision satisfactory to the Trustee shall have
been irrevocably made for the giving of such notice, and (B) in the case of
Notes which may be required to be purchased on a Purchase Date, no deposit under
clause (b)(2) of subparagraph (ii) above shall constitute such payment,
discharge and satisfaction as aforesaid.
Any such moneys so deposited with the Trustee as provided in this
Section 11.1 may at the direction of the Corporation also be invested and
reinvested in Government Obligations maturing in the amounts and time as
hereinbefore set forth, and all income from all Government Obligations in the
hands of the Trustee pursuant to this Section 11.1 which is not required for the
payment of the Notes and interest and premium thereon with respect to which such
moneys shall have been so deposited shall be deposited in the Indemnification
Fund, to the extent required by Section 4.5 hereof, and thereafter (A) if any
Notes are then Outstanding, be deposited in the Revenue Fund as and when
realized and collected, for use and application as are other moneys credited to
such Fund, and (B) if no Notes are then Outstanding and no amounts are owed to
any Other Beneficiaries hereunder, be paid to the Corporation.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any Note, the right to transfer and exchange such Note pursuant to
Section 3.7 shall survive.
Notwithstanding any provision of any other Section of this Indenture
which may be contrary to the provisions of this Section 11.1, all moneys or
Investment Securities set aside and held in trust pursuant to the provisions of
this Section 11.1 for the payment of the principal of, premium, if any, and
interest on Notes shall be applied to and used solely for the payment of the
principal of, premium, if any, and interest on the particular Note with respect
to which such moneys and Investment Securities have been so set aside in trust.
Anything in Article Eight hereof to the contrary notwithstanding, if
moneys or Government Obligations have been deposited or set aside with the
Trustee pursuant to this Section 11.1 for the payment of Notes and such Notes
shall be deemed to have been paid and to be no longer Outstanding hereunder as
provided in this Section 11.1, but such Notes shall not have in fact been
actually paid in full, no amendment to the provisions of this Article Eleven
shall be made without the consent of the Holder of each Note affected thereby.
The Corporation may at any time cause to be canceled any Notes
previously executed and delivered, which the Corporation may have acquired in
any manner whatever, and such Notes upon such surrender for cancellation shall
be deemed to be paid and no longer Outstanding hereunder.
The obligations of the Corporation under this Indenture, and the liens,
pledges, charges, trusts, covenants and agreements of the Corporation herein
made or provided for, shall be fully discharged and satisfied as to any Demand
Purchase Agreement, Credit Enhancement Facility or Swap Agreement in the manner
and with the effect provided in the Supplemental Indenture providing for such
Demand Purchase Agreement, Credit Enhancement Facility or Swap Agreement.
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Notwithstanding the foregoing provisions of this Section 11.1, no Note
shall be defeased hereunder if, after giving effect to the defeasance, the
requirements in Section 10.2 hereof are not met on the date such Note is to be
defeased, treating, for purposes of said Section 10.2, any Note that is to be
defeased as being redeemed on the date it is to be defeased at an assumed
redemption price equal to the Principal Amount thereof with interest accrued
thereon to the date of defeasance, plus, if the Note is to be redeemed under
this Section 11.1 at a Redemption Price greater than the Principal Amount
thereof, a premium equal to the amount by which the Redemption Price exceeds
such Principal Amount.
Section 11.2. Notes Not Presented for Payment When Due; Moneys Held for
the Notes after Due Date of Notes. Subject to the provisions of the next
sentence of this paragraph, if any Note shall not be presented for payment when
the principal thereof shall become due, whether at Stated Maturity, at the date
fixed for redemption or otherwise, and if moneys or Investment Securities
described in subdivision 1 of the definition thereof in Section 1.1 hereof shall
at such due date be held by the Trustee, or a Paying Agent therefor, in trust
for that purpose sufficient and available to pay the principal of and premium,
if any, on such Note, together with all interest due on such principal to the
due date thereof or to the date fixed for redemption thereof, all liability of
the Corporation for such payment shall forthwith cease, determine and be
completely discharged, and thereupon it shall be the duty of the Trustee, or
such Paying Agent, to hold said moneys or Investment Securities without
liability to the Holder of such Note for interest thereon, in trust for the
benefit of the Holder of such Note, who thereafter shall be restricted
exclusively to said moneys or Investment Securities for any claim of whatever
nature on his part on or with respect to said Note, including any claim for the
payment thereof. In the event any such moneys or Investment Securities, or any
other moneys or Investment Securities with respect to interest due and payable
on any Note prior to the Maturity thereof, held by the Trustee or any Paying
Agent for the Holders of such Notes remain unclaimed as of (a) fifty-five (55)
days after the principal of or interest on the respective Notes with respect to
which such moneys or Investment Securities have been so set aside has become due
and payable (whether at Stated Maturity, upon call for redemption or otherwise),
the Trustee shall, within five (5) days thereafter, give notice thereof to the
Holders of such Notes in the same manner as a notice of redemption given in
accordance with Section 10.4 hereof, and (b) two (2) years after the principal
of or interest on such Notes has become due and payable as aforesaid, the
Trustee or such Paying Agent, as the case may be, shall, without further request
by the Corporation, pay such moneys and Investment Securities, to the extent
permitted by law, to the Corporation against a written receipt therefor, and
otherwise hold or dispose of such moneys and Investment Securities as required
by law; provided that, if applicable law requires the Trustee or any Paying
Agent to dispose of any such moneys or Investment Securities prior to the end of
the period described in the preceding clause (b), disposition of such moneys and
Investment Securities shall be made at the time and otherwise in accordance with
such law.
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ARTICLE TWELVE
NOTEHOLDERS' LISTS AND REPORTS
Section 12.1. Note Registrar To Furnish Trustee Names and Addresses to
Noteholders. The Note Registrar will furnish or cause to be furnished to the
Trustee (a) not more than five (5) 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 Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, (b) at such other times as the Trustee may request
in writing, within thirty (30) days after receipt by the Note Registrar of any
such request, a list of similar form and content as of a date not more than ten
(10) days prior to the time such list is furnished; provided, however, that so
long as the Trustee is the Note Registrar, no such list shall be required to be
furnished.
Section 12.2. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 12.1 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 12.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Corporation, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
Section 12.3. Reports by Corporation.
(a) The Corporation shall:
(i) file with the Trustee, within fifteen (15) days after the
Corporation 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
Corporation may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the 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 Corporation with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
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(iii) supply to the Trustee a sufficient number of copies (and
the Trustee shall transmit by mail to all Noteholders described in TIA
ss. 313(c)) of such summaries of any information, documents and reports
required to be filed by the Corporation pursuant to clauses (i) and
(ii) of this paragraph as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Corporation otherwise determines, the Fiscal Year of the
Corporation shall end on December 31 of each year. In the event the Corporation
changes its Fiscal Year, it shall promptly notify the Trustee.
Section 12.4. Reports by Trustee. If required by TIA ss. 313(a), within
sixty (60) days after each December 31 beginning with December 31, 2001, the
Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Trustee also
shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each other stock exchange, if
any, on which the Notes are listed. The Corporation shall notify the Trustee if
and when the Notes are listed on any stock exchange.
12-2
<PAGE>
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.1. Consent, Etc., of Noteholders. Any consent, request,
direction, approval, objection or other instrument required by this Indenture to
be signed and executed by Noteholders may be in any number of writings of
similar tenor and may be signed or executed by such Noteholders in person or by
agent appointed in writing. Proof of the execution of any such consent, request,
direction, approval, objection or other instrument or of the writing appointing
any such agent and of the ownership of Notes, if made in the following manner,
shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of the Corporation, any Paying Agent, any Deposit Agent, any
Remarketing Agent, any Depositary, any Auction Agent, any Broker-Dealer or the
Trustee with regard to any action taken by it under such consent, request,
direction, approval, objection or other instrument, namely:
(A) The fact and date of the execution by any person of any
such writing may be proved by the certificate of any officer in any
jurisdiction who by law has power to take acknowledgements within such
jurisdiction that the person signing such writing acknowledged before
him the execution thereof, or by an affidavit of any witness to such
execution.
(B) The fact of ownership of Notes, the numbers and other
identification of such Notes, and the date of holding the same shall be
proved by the Note Register.
Section 13.2. Limitation of Rights. With the exception of rights herein
conferred, nothing expressed or mentioned in or to be implied from this
Indenture or the Notes is intended or shall be construed to give to any Person
other than the parties hereto, any Authenticating Agent, each Paying Agent, each
Deposit Agent, each Remarketing Agent, each Depositary, each Auction Agent, each
Broker-Dealer and the Beneficiaries, any legal or equitable right, remedy, or
claim under or in respect to this Indenture or any covenants, conditions and
provisions herein contained; this Indenture and all of the covenants, conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto, any Authenticating Agent, each Paying Agent, each
Deposit Agent, each Remarketing Agent, each Depositary, each Auction Agent, each
Broker-Dealer and the Beneficiaries as herein provided.
Section 13.3. Severability. If any provision of this Indenture shall be
held or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions or in all cases because it conflicts with any provisions of any
constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or
paragraphs in this Indenture contained shall not affect the remaining portions
of this Indenture or part thereof.
13-1
<PAGE>
Section 13.4. Notices. A. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by certified mail, postage prepaid, with proper address as indicated
below or, as to Other Beneficiaries, to a proper address specified in or
pursuant to a Supplemental Indenture. The Corporation, the Trustee and any
Rating Agency may, by written notice given by each to the others, designate any
other address or addresses to which notices, certificates or other
communications to them shall be sent when required as contemplated by this
Indenture. Until otherwise provided by the respective parties, all notices,
certificates and communications to each of them shall be addressed as follows:
To the Corporation: Education Loans Incorporated
105 First Avenue Southwest, Suite 200
Aberdeen, South Dakota 57401
Attn: President
To the Trustee: U.S. Bank National Association
141 North Main Avenue
Sioux Falls, South Dakota 57117
Attn: Corporate Trust Department
To Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Attn: Asset-Backed Group
To Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: Public Finance Department--
Structured Finance Group
B. Except as is otherwise provided in this Indenture, any provision in
this Indenture for the mailing of notice or other instrument to Holders of Notes
shall be fully complied with if it is mailed by first-class mail, postage
prepaid, to each Holder of Notes outstanding at the address appearing on the
Note Register. In addition, whenever notice is to be mailed under this Indenture
to the Holders of Notes, the Trustee shall also, upon request, mail a copy of
such notice to (1) any Holder of at least $1,000,000 in aggregate Principal
Amount of the Notes (or, in the event less than $1,000,000 in aggregate
Principal Amount of Notes is outstanding, the Holder of all outstanding Notes),
in addition to the copy mailed to such Holder's address appearing on the Note
Register, at such other address as such Holder shall specify in writing to the
Trustee, and (2) any Person that is the beneficial owner of a Note, as evidenced
to the satisfaction of the Trustee, at such address as such beneficial owner
shall specify in writing to the Trustee; provided that any defect in or failure
to mail any such notice prescribed by this sentence shall not affect the
validity of any proceedings to be taken (including, without limitation, for the
redemption of Notes) pursuant to such notice.
13-2
<PAGE>
Section 13.5. Counterparts. This Indenture may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 13.6. Indenture Constitutes a Security Agreement. An executed
counterpart or certified copy of this Indenture delivered to and accepted by the
Trustee shall constitute a security agreement pursuant to and for all purposes
of the Uniform Commercial Code of the State of South Dakota and of any other
state or jurisdiction.
Section 13.7. Payments Due on Non-Business Days. Except as may be
otherwise provided in a Supplemental Indenture, in any case where the principal
of, premium, if any, or interest on the Notes or amounts due to any Beneficiary
shall be due on a day other than a Business Day, then payment of such principal,
premium and interest may be made on the next succeeding Business Day with the
same force and effect as if made on the date due and no interest shall accrue
for the intervening period.
Section 13.8. Notices to Rating Agencies. So long as any Outstanding
Notes are rated by a Rating Agency, the Trustee agrees to give the Rating Agency
prompt written notice of the appointment of any successor Trustee and a copy of
any notice given to Beneficiaries in accordance with Section 7.3 hereof.
Section 13.9. Governing Law. This Indenture shall be governed by and be
construed in accordance with the laws of the State of South Dakota without
giving effect to the conflicts-of-laws principles thereof.
Section 13.10. Rights of Other Beneficiaries. All rights of any Other
Beneficiary under this Indenture to consent to or direct certain remedies,
waivers, actions and amendments hereunder shall cease for so long as such Other
Beneficiary is in default of any of its obligations or agreements under the Swap
Agreement, the Credit Enhancement Facility or the Demand Purchase Agreement by
reason of which such Person is an Other Beneficiary.
Section 13.11. Conflict with Trust Indenture Act. If any provision of
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 13.12. Opinions as to Trust Estate.
(a) On the date of issuance and delivery of the Initial Notes, the
Corporation shall furnish to the 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
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<PAGE>
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 security interest
in favor of the Trustee, for the benefit of the Trustee, 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 make such lien and
security interest effective.
(b) On or before December 31 in each calendar year, beginning in 2001,
the Corporation shall furnish to the Trustee an opinion of Counsel with respect
to each jurisdiction in which the Financed Student Loans are located or a
Uniform Commercial Code financing statement has been filed by the Corporation
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 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 December 31 in the following calendar year.
Section 13.13. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Corporation and at its expense accompanied by an opinion of
Counsel (which may be counsel to the Trustee or any other Counsel reasonably
acceptable to the Trustee) to the effect that such recording is necessary either
for the protection of the Noteholders or any other Person secured hereunder or
for the enforcement of any right or remedy granted to the Trustee under this
Indenture.
Section 13.14. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Corporation or join in any
institution against the Corporation of, any bankruptcy, reorganization,
arrangement, insolvency 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 the Servicing
Agreement.
Section 13.15. Income Tax Characterization. The Corporation has
structured this Indenture and the Notes with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Corporation secured by the Trust Estate. The Corporation,
the Trustee, the Servicer and each Noteholder agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder, by acceptance of
its Note, agrees to be bound by the provisions of this Section. Each Noteholder
agrees that it will cause any Person acquiring an interest in a Note through it
to comply with this Indenture as to treatment as indebtedness under applicable
tax law, as described in this Section.
13-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
EDUCATION LOANS INCORPORATED
By /s/ A. Norgrin Sanderson
---------------------------------
President
Attest:
/s/ Manly Feinstein
- ---------------------------------
Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Gloria Kessler
---------------------------------
Its Assistant Vice President
------------------------------
Attest:
/s/ P.J. Kapsch
- ---------------------------------
Its Trust Officer
------------------------------
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<PAGE>
EXHIBIT A
Addressed to Trustee
ELIGIBLE FFELP LOAN ACQUISITION CERTIFICATE
-------------------------------------------
This Eligible FFELP Loan Acquisition Certificate is submitted pursuant
to the provisions of Section 4.2 of the Indenture of Trust, dated as of December
1, 1999 (as amended and supplemented from time to time in accordance with its
terms, the "Indenture"), between Education Loans Incorporated (the
"Corporation") and U.S. Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you are hereby authorized and requested
to disburse to the Lenders identified in the schedule attached hereto the
amounts specified in such schedule from the Series ___ Acquisition Account (or,
in the case of an exchange pursuant to Section 4.2 of the Indenture, the Student
Loans listed in Annex 1 hereto) for the acquisition of Eligible FFELP Loans.
With respect to the Eligible FFELP Loans so to be acquired, the Corporation
hereby certifies as follows:
1. The Eligible FFELP Loans to be acquired (the "Acquired Eligible
Loans") will be further described in an updating certificate as required by
Section 4.2 of the Indenture.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the purchase price of the Acquired Eligible Loans specified in the
applicable Supplemental Indenture (or, if a Financed Student Loan is being sold
in exchange for an Acquired Eligible Loan under the provisions of Section 4.2 of
the Indenture, the aggregate Principal Balance of, and accrued noncapitalized
borrower interest on, such Financed Student Loan does not exceed the aggregate
Principal Balance of, and accrued noncapitalized borrower interest on, such
Acquired Eligible Loan plus any moneys deposited with the Trustee under the
Indenture as part of the sale price of such Financed Student Loan).
3. Each Acquired Eligible Loan is an Eligible Loan authorized so to be
acquired by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Acquired Eligible Loan, a copy of the
Student Loan Purchase Agreement between the Corporation and the Lender
relating thereto;
(b) with respect to each Guaranteed Loan included among the
Acquired Eligible Loans, a certified copy of the Guarantee Agreement
relating thereto;
(c) a copy of the opinion of counsel for the Lender referred
to in the related Student Loan Purchase Agreement;
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<PAGE>
(d) an opinion of Counsel to the Corporation specifying each
action necessary to perfect a security interest in all Eligible FFELP
Loans to be acquired by the Corporation pursuant to the Student Loan
Purchase Agreements in favor of the Trustee in the manner provided for
by the provisions of 20 U.S.C. ss.ss. 1087-2(d)(3) and
1082(m)(1)(D)(iv);
(e) evidence that the promissory notes evidencing each
Acquired Eligible Loan have had stamped thereon or affixed thereto a
notice specifying that they have been assigned to the Trustee and that
Uniform Commercial Code Financing Statements with respect thereto have
been filed in such place or places specified by the opinion of the
counsel for the Corporation pursuant to paragraph 4(d) hereof;
(f) evidence in form satisfactory to the Trustee that each
action necessary to perfect a first security interest in each of the
Acquired Eligible Loans in favor of the Trustee has been accomplished;
and
(g) instruments duly assigning the Acquired Eligible Loans to
the Trustee.
5. The Corporation is not, on the date hereof, in default under the
Indenture or any Student Loan Purchase Agreement relating to the Acquired
Eligible Loans, and, to the best knowledge of the Corporation, no Lender is in
default under any Student Loan Purchase Agreement relating to the Acquired
Eligible Loans. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinions
of counsel referred to in paragraphs 4(c) and 4(d) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreements relating to the Acquired Eligible Loans and the Indenture for the
acquisition of the Acquired Eligible Loans and the disbursement hereby
authorized and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate on
behalf of the Corporation.
WITNESS my hand this ______ day of ______, ___.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
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<PAGE>
EXHIBIT B
---------
Addressed to Trustee
ELIGIBLE FFELP LOAN ORIGINATION CERTIFICATE
-------------------------------------------
This Eligible FFELP Loan Origination Certificate is submitted pursuant
to the provisions of Section 4.2 of the Indenture of Trust, dated as of December
1, 1999 (as amended and supplemented from time to time in accordance with its
terms, the "Indenture"), between Education Loans Incorporated (the
"Corporation") and U.S. Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you are hereby authorized and requested
to disburse to _________ the sums set forth in the schedule attached hereto (the
"Eligible Loan Origination Schedule") from the Series ______ Acquisition Account
for the origination of Eligible FFELP Loans. With respect to the Eligible FFELP
Loans so to be originated, the Corporation hereby certifies as follows:
1. The Eligible FFELP Loans to be originated are those specified in the
Eligible Loan Origination Schedule (the "Originated Eligible Loans"). The
original principal amount of each Originated Eligible Loan is as shown on the
Eligible Loan Origination Schedule.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the aggregate Principal Balance of, and accrued noncapitalized borrower
interest on, the Originated Eligible Loans.
3. Each Originated Eligible Loan is an Eligible Loan authorized so to
be originated by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Guaranteed Loan included among the
Originated Eligible Loans, a certified copy of the Guarantee Agreement
relating thereto;
(b) an opinion of Counsel to the Corporation specifying each
action necessary to perfect a security interest in all Eligible Loans
to be originated by the Corporation in favor of the Trustee in the
manner provided for by the provisions of 20 U.S.C. ss.ss. 1087-2(d)(3)
and 1082(m)(1)(D)(iv);
(c) evidence that the promissory notes evidencing each
Originated Eligible Loan have had stamped thereon or affixed thereto a
notice specifying that they have been assigned to the Trustee and that
Uniform Commercial Code Financing Statements with respect thereto have
been filed in such place or places specified by the opinion of the
counsel for the Corporation pursuant to paragraph 4(b) hereof;
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<PAGE>
(d) evidence in form satisfactory to the Trustee that each
action necessary to perfect a first security interest in each of the
Originated Eligible Loans in favor of the Trustee has been
accomplished; and
(e) instruments duly assigning the Originated Eligible Loans
to the Trustee.
5. The Corporation is not, on the date hereof, in default under the
Indenture. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinion of
counsel referred to in paragraph 4(b) hereof.
6. All of the conditions specified in the Indenture for the origination
of the Originated Eligible Loans and the disbursement hereby authorized and
requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate on
behalf of the Corporation.
WITNESS my hand this _________ day of ______, ___.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
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<PAGE>
EXHIBIT C
---------
Addressed to Trustee
STUDENT LOAN ACQUISITION CERTIFICATE
------------------------------------
This Student Loan Acquisition Certificate is submitted pursuant to the
provisions of Section 4.8 of the Indenture of Trust, dated as of December 1,
1999 (as amended or supplemented from time to time in accordance with its terms,
the "Indenture"), between Education Loans Incorporated (the "Corporation") and
U.S. Bank National Association, Minneapolis, Minnesota, as Trustee. All
capitalized terms used in this Certificate and not otherwise defined herein
shall have the respective meanings given to such terms in the Indenture. In your
capacity as Trustee, you are hereby authorized and requested to disburse to the
Lenders or SLFC identified in the schedule attached hereto (the "Student Loan
Acquisition Schedule") the amounts specified in such Schedule from the Series
______ Surplus Account for the acquisition of (a) FFELP Loans meeting the
requirements of clauses (A)(1) and (2) or (B) of the definition of "Eligible
Loans" in Section 1.1 of the Indenture or (b) Alternative Loans meeting the
requirements of clause (B) of the definition of "Eligible Loans" in Section 1.1
of the Indenture. With respect to the Student Loans so to be acquired, the
Corporation hereby certifies as follows:
1. The Student Loans to be acquired are those specified in the Student
Loan Acquisition Schedule (the "Acquired Student Loans").
2. The amount to be disbursed pursuant to this Certificate does not
exceed the aggregate of the remaining Principal Balance of the Acquired Student
Loans plus accrued noncapitalized interest thereon payable by the Eligible
Borrower.
3. Each Acquired Student Loan is a Student Loan (and, except as
permitted by the provisions of Section 4.8 of the Indenture, is an Eligible
Loan) authorized so to be acquired by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Acquired Student Loan, a copy of the
Student Loan Purchase Agreement (i) in the case of FFELP Loans, between
the Corporation and the Lender relating thereto, or (ii) in the case of
Alternative Loans, between the Corporation and SLFC relating thereto;
(b) with respect to each Acquired Student Loan that
constitutes an Alternative Loan, (i) the original promissory note
relating thereto, endorsed as required by the Student Loan Purchase
Agreement, and (ii) the amount, if any, required by the related
Supplemental Indenture to be deposited in the Alternative Loan
Guarantee Fund in connection with such acquisition;
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<PAGE>
(c) with respect to each Guaranteed Loan included among the
Acquired Student Loans, a certified copy of the Guarantee Agreement
relating thereto;
(d) a copy of the opinion of counsel for the Lender or SLFC
referred to in the related Student Loan Purchase Agreement;
(e) an opinion of Counsel to the Corporation specifying each
action necessary to perfect a security interest in all Student Loans to
be acquired by the Corporation pursuant to the Student Loan Purchase
Agreements in favor of the Trustee (including, in the case of FFELP
Loans, in the manner provided for by the provisions of 20 U.S.C. ss.ss.
1087-2(d)(3) and 1082(m)(1)(D)(iv));
(f) evidence that the promissory notes evidencing each
Acquired Student Loan have had stamped thereon or affixed thereto a
notice specifying that they have been assigned to the Trustee and that
Uniform Commercial Code Financing Statements with respect thereto have
been filed in such place or places specified by the opinion of the
counsel for the Corporation pursuant to paragraph 4(e) hereof;
(g) evidence in form satisfactory to the Trustee that each
action necessary to perfect a first security interest in each of the
Acquired Student Loans in favor of the Trustee has been accomplished;
(h) instruments duly assigning the Acquired Student Loans to
the Trustee; and
(i) the certifications required by Section 4.8 of the
Indenture.
5. The Corporation is not, on the date hereof, in default under the
Indenture or any Student Loan Purchase Agreement relating to the Acquired
Student Loans, and, to the best knowledge of the Corporation, neither SLFC nor
any Lender is in default under any Student Loan Purchase Agreement relating to
the Acquired Student Loans. The Corporation is not aware of any default existing
on the date hereof under any of the other documents referred to in paragraph 4
hereof, nor of any circumstances which would reasonably prevent reliance upon
the opinions of counsel referred to in paragraphs 4(d) and 4(e) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreements relating to the Acquired Student Loans and the Indenture for the
acquisition of the Acquired Student Loans and the disbursement hereby authorized
and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate on
behalf of the Corporation.
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<PAGE>
WITNESS my hand this _________ day of ______, ___.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
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<PAGE>
EXHIBIT D
---------
Addressed to Trustee
UPDATING ELIGIBLE FFELP LOAN ACQUISITION CERTIFICATE
----------------------------------------------------
This Updating Eligible FFELP Loan Acquisition Certificate is submitted
pursuant to the provisions of Section 4.2 of the Indenture of Trust, dated as of
December 1, 1999 (as amended and supplemented from time to time in accordance
with its terms, the "Indenture"), between Education Loans Incorporated (the
"Corporation") and U.S. Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you have, pursuant to an Eligible FFELP
Loan Acquisition Certificate, dated _________, been previously authorized and
requested to disburse to __________________ the sum of $_________ from the
Series ____ Acquisition Account (or, in the case of an exchange pursuant to
Section 4.2 of the Indenture, the Student Loans listed in Annex 1 hereto) for
the acquisition of Eligible FFELP Loans. With respect to the Eligible FFELP
Loans so acquired, the Corporation hereby certifies as follows:
1. The Eligible FFELP Loans acquired with such moneys or upon such
exchange are those specified in Schedule A attached hereto (the "Acquired
Eligible Loans").
2. The remaining Principal Balance of each Acquired Eligible Loan is as
shown on such Schedule A.
3. The undersigned is authorized to sign and submit this Certificate on
behalf of the Corporation.
WITNESS my hand this _________ day of ______, ___.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
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<PAGE>
EXHIBIT E
---------
Addressed to Trustee
ELIGIBLE ALTERNATIVE LOAN ACQUISITION CERTIFICATE
-------------------------------------------------
This Eligible Alternative Loan Acquisition Certificate is submitted
pursuant to the provisions of Section 4.2 of the Indenture of Trust, dated as of
December 1, 1999 (as amended and supplemented from time to time in accordance
with its terms, the "Indenture"), between Education Loans Incorporated (the
"Corporation") and U.S. Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you are hereby authorized and requested
to disburse to SLFC the amounts specified in Schedule A hereto from the Series
________ Acquisition Account (or, in the case of an exchange pursuant to Section
4.2 of the Indenture, the Student Loans listed in Annex 1 hereto) for the
acquisition of Eligible Alternative Loans. With respect to the Eligible
Alternative Loans so to be acquired, the Corporation hereby certifies as
follows:
1. Each Eligible Alternative Loans to be acquired (the "Acquired
Eligible Loans") is described, including the Principal Balance thereof, on
Schedule B hereto.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the purchase price of the Acquired Eligible Loans specified in the
applicable Supplemental Indenture (or, if a Financed Student Loan is being sold
in exchange for an Acquired Eligible Loan under the provisions of Section 4.2 of
the Indenture, the aggregate Principal Balance of, and accrued noncapitalized
borrower interest on, such Financed Student Loan does not exceed the aggregate
Principal Balance of, and accrued noncapitalized borrower interest on, such
Acquired Eligible Loan plus any moneys deposited with the Trustee under the
Indenture as part of the sale price of such Financed Student Loan).
3. Each Acquired Eligible Loan is an Eligible Loan authorized so to be
acquired by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Acquired Eligible Loan, a copy of the
Student Loan Purchase Agreement between the Corporation and SLFC
relating thereto;
(b) with respect to each Acquired Eligible Loan, the original
promissory note relating thereto, endorsed as required by the Student
Loan Purchase Agreement;
(c) with respect to each Acquired Eligible Loan, the amount,
if any, to be deposited in the Alternative Loan Guarantee Fund with
respect thereto, as required by the related Supplemental Indenture;
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<PAGE>
(d) a copy of the opinion of counsel for SLFC referred to in
the related Student Loan Purchase Agreement;
(e) an opinion of Counsel to the Corporation specifying each
action necessary to perfect a security interest in all Eligible
Alternative Loans to be acquired by the Corporation pursuant to the
Student Loan Purchase Agreement in favor of the Trustee;
(f) evidence that the promissory notes evidencing each
Acquired Eligible Loan have had stamped thereon or affixed thereto a
notice specifying that they have been assigned to the Trustee and that
Uniform Commercial Code Financing Statements with respect thereto have
been filed in such place or places, if any, specified by the opinion of
the counsel for the Corporation pursuant to paragraph 4(e) hereof;
(g) evidence in form satisfactory to the Trustee that each
action necessary to perfect a first security interest in each of the
Acquired Eligible Loans in favor of the Trustee has been accomplished;
and
(h) instruments duly assigning the Acquired Eligible Loans to
the Trustee.
5. The Corporation is not, on the date hereof, in default under the
Indenture or the Student Loan Purchase Agreement relating to the Acquired
Eligible Loans, and, to the best knowledge of the Corporation, SLFC is not in
default under the Student Loan Purchase Agreement relating to the Acquired
Eligible Loans. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinions
of counsel referred to in paragraphs 4(d) and 4(e) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreement relating to the Acquired Eligible Loans and the Indenture for the
acquisition of the Acquired Eligible Loans and the disbursement hereby
authorized and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate on
behalf of the Corporation.
WITNESS my hand this _________ day of ______, ___.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
E-2
<PAGE>
EXHIBIT 4.2
================================================================================
FIRST SUPPLEMENTAL INDENTURE OF TRUST
between
EDUCATION LOANS INCORPORATED
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
Dated as of December 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
PARTIES ................................................................ 1
RECITALS ................................................................ 1
Section 1. Definitions..................................................... 1
Section 2. Authorization and Terms of Series 1999-1 Notes.................. 11
Section 3. Interest Payable on Series 1999-1 Notes......................... 13
Section 4. Determining the Series 1999-1 Note Auction Rate................. 16
Section 5. Determination of Payment Defaults and Payment of
Auction Agent and Broker-Dealer Fees............................ 25
Section 6. Calculation of Maximum Auction Rate, All Hold
Rate, Net Loan Rate, One-Month LIBOR, Three-Month
LIBOR and Non-Payment Rate...................................... 25
Section 7. Notification of Rates, Amounts and Payment Dates................ 26
Section 8. Auction Agent................................................... 27
Section 9. Broker-Dealers.................................................. 28
Section 10. Changes in Auction Period or Periods............................ 28
Section 11. Changes in the Auction Date..................................... 29
Section 12. Additional Provisions Regarding the Series 1999-1
Note Interest Rate.............................................. 30
Section 13. Qualifications of Market Agent.................................. 30
Section 14. Purposes of Issuance of Series 1999-1 Notes..................... 31
Section 15. Deposit of Series 1999-1 Note Proceeds.......................... 31
Section 16. Redemption of Series 1999-1 Notes............................... 32
Section 17. Book-Entry Series 1999-1 Notes ................................. 34
Section 18. Series 1999-1 Accounts and Subaccounts.......................... 36
Section 19. Series 1999-1 Capitalized Interest Account...................... 37
Section 20. Purchase of Eligible Loans From Series 1999-1 Acquisition
Account and Series 1999-1 Surplus Subaccount.................... 37
Section 21. Limitation on Costs of Issuance, Administrative Expenses
and Note Fees................................................... 40
Section 22. Proceeds of Sales of Certain Student Loans To Be Deposited
in the Acquisition Fund......................................... 40
Section 23. Certain Findings, Determinations and Designations............... 40
Section 24. Governing Law................................................... 41
Section 25. Section Headings; Table of Contents............................. 41
Section 26. Severability.................................................... 41
Section 27. Counterparts.................................................... 42
Section 28. Effect of First Supplemental Indenture.......................... 42
SIGNATURES.................................................................. 43
Exhibit A--Form of Series 1999-1 Senior Notes............................... A-1
Exhibit B--Form of Series 1999-1C Notes..................................... B-1
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Exhibit C--Form of Notice of A Payment Default.............................. C-1
Exhibit D--Form of Notice of Cure of Payment Default........................ D-1
Exhibit E--Form of Notice of Proposed Auction Period Adjustment............. E-1
Exhibit F--Form of Notice Establishing Auction Period Adjustment............ F-1
Exhibit G--Form of Notice of Change in Auction Date......................... G-1
Exhibit H-1--List of EdLinc Student Loan Purchase Agreements...............H-1-1
Exhibit H-2--List of GOAL Funding Student Loan Purchase Agreements.........H-2-1
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<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE OF TRUST, dated as of December 1, 1999,
between EDUCATION LOANS INCORPORATED, a corporation duly organized and existing
under the laws of the State of Delaware (the "Corporation"), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association duly established, existing
and authorized to accept and execute trusts of the character herein set out
under and by virtue of the laws of the United States (the "Trustee");
W I T N E S S E T H:
WHEREAS, the Corporation and the Trustee, as trustee, have heretofore
executed and delivered an Indenture of Trust (the "Original Indenture"); and
WHEREAS, the Original Indenture prescribes the terms and conditions upon
which the Corporation may from time to time authorize and issue series of Notes
(as defined in the Original Indenture); and
WHEREAS, the Corporation has, by proper action of its Board, authorized and
determined to issue three series of Notes in the respective aggregate principal
amounts of $78,000,000 (the "Series 1999-1A Notes") and $39,000,000 (the "Series
1999-1B Notes"), each of which will be a series of Class A Notes, and $9,300,000
(the "Series 1999-1C Notes," and, together with the Series 1999-1A Notes and the
Series 1999-1B Notes, the "Series 1999-1 Notes"), which will be a series of
Class B Notes; and
WHEREAS, the Corporation desires by this First Supplemental Indenture to
prescribe the terms and provisions of the Series 1999-1 Notes, all as more fully
set forth herein; and
WHEREAS, the Corporation also desires, at this time, to amend certain
provisions of the Original Indenture in conjunction with the issuance of the
Series 1999 Notes; and
WHEREAS, the execution and delivery of this First Supplemental Indenture
and the issuance of the Series 1999-1 Notes have been in all respects duly and
validly authorized by the Corporation;
NOW, THEREFORE, THIS First Supplemental INDENTURE WITNESSETH:
Section 1. Definitions. In this First Supplemental Indenture, the terms
defined in the Original Indenture shall, except as otherwise provided in this
Section 1, have the same meaning when used herein unless the context or use
thereof indicates another or different meaning or intent. In addition, the
following terms shall have the following respective meanings unless the context
hereof clearly requires otherwise:
"Administrative Cost and Note Fee Rate" shall mean a rate per annum equal
to the sum of (i) 1.05%, (ii) the Auction Agent Fee Rate and (iii) the
Broker-Dealer Fee Rate.
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<PAGE>
"All Hold Rate" shall mean (i) for Auction Periods of thirty-five (35) days
or less, 85% of One-Month LIBOR, and (ii) for Auction Periods of greater than
thirty-five (35) days, 85% of Three-Month LIBOR.
"Alternative Loan Program" shall mean each of the following programs for
the making of Student Loans other than FFELP Loans the Alternative Loans under
which are eligible to be Financed under the Indenture: (i) the Great
Opportunities Academic Loan and Great Opportunities Academic Loan II Programs
offered by U.S. Bank National Association; (ii) the ChoiceLoan and Pathway Loan
Programs offered by Marquette Bank, N.A.; and (iii) such other programs upon
receipt by the Trustee of written notice thereof by an Authorized Officer of the
Corporation and confirmation from each Rating Agency that financing of loans
under such programs under the Indenture will not cause the withdrawal or
downgrade of any rating of any series of Notes any of which are Outstanding.
"Auction" shall mean the implementation of the Auction Procedures on an
Auction Date.
"Auction Agent" shall mean the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"Auction Agent Agreement" shall mean the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"Auction Agent Fee" shall have the meaning ascribed to such term in the
Auction Agent Agreement.
"Auction Agent Fee Rate" shall have the meaning ascribed to such term in
the Auction Agent Agreement.
"Auction Date" shall mean, initially, with respect to each series of Series
1999-1 Notes, February 8, 2000, and, thereafter, with respect to each such
series of Series 1999-1 Notes, the Business Day immediately preceding the first
day of each Auction Period for such series, other than:
(A) an Auction Period commencing after the ownership of such series is no
longer maintained in Book-Entry Form by the Securities Depository;
(B) an Auction Period commencing after and during the continuance of a
Payment Default; or
(C) an Auction Period commencing less than two (2) Business Days after the
cure of a Payment Default.
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<PAGE>
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 11 of this First Supplemental Indenture.
"Auction Period" shall mean the Interest Period applicable to the Series
1999-1A Notes, the Series 1999-1B Notes and the Series 1999-1C Notes, which
Auction Period (after the Initial Interest Period for each such series)
initially shall consist generally of twenty-eight (28) days, as the same may be
adjusted pursuant to Section 3 or Section 10 hereof.
"Auction Period Adjustment" shall mean an adjustment to the Auction Period
as provided in Section 10 hereof.
"Auction Procedures" shall mean the procedures set forth in Sections 4
through 11 hereof by which the Auction Rate is determined.
"Auction Rate" shall mean the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 4(c)(ii) hereof.
"Authorized Denominations" shall mean, with respect to the Series 1999-1
Notes, $50,000 and any integral multiple thereof.
"Available Series 1999-1 Notes" shall have the meaning ascribed to such
term in Section 4(c)(i)(A) hereof.
"Bid" shall have the meaning ascribed to such term in Section 4(a)(i)
hereof.
"Bid Auction Rate" shall have the meaning ascribed to such term in Section
4(c)(i) hereof.
"Bidder" shall have the meaning ascribed to such term in Section 4(a)(i)
hereof.
"Book-Entry Form" or "Book-Entry System" shall mean a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Securities Depository or its nominee as registered holder, with the
securities "immobilized" to the custody of the Securities Depository, and (iii)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"Broker-Dealer" shall mean (i) with respect to the Series 1999-1A Notes and
the Series 1999-1C Notes, Salomon Smith Barney Inc., and (ii) with respect to
the Series 1999-1B Notes, Banc of America Securities LLC, or any other broker or
dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the Corporation pursuant to Section 9 hereof and (c) has entered into a
Broker-Dealer Agreement
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<PAGE>
with respect to one or more series of the Series 1999-1 Notes that is in effect
on the date of reference.
"Broker-Dealer Agreement" shall mean each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Corporation, pursuant to which
the Broker-Dealer agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreement,
dated as of December 1, 1999, between Bankers Trust Company, as Auction Agent,
and Salomon Smith Barney Inc., as Broker-Dealer with respect to the Series
1999-1A Notes and the Series 1999-1C Notes, and the Broker-Dealer Agreement,
dated as of December 1, 1999, between Bankers Trust Company, as Auction Agent,
and Banc of America Securities LLC, as Broker-Dealer with respect to the Series
1999-1B Notes.
"Broker-Dealer Fee" shall have the meaning ascribed to such term in the
Auction Agent Agreement.
"Broker-Dealer Fee Rate" shall have the meaning ascribed to such term in
the Auction Agent Agreement.
"Business Day" shall mean a day of the year on which (i) banks located in
the city in which the Principal Office of the Trustee is located are not
required or authorized to remain closed, (ii) banks located in the city in which
the Principal Office of the Auction Agent, as set forth in and for purposes of
the Auction Agent Agreement, is located are not required or authorized to remain
closed and (iii) The New York Stock Exchange is not closed. The Trustee shall
provide to the Auction Agent on the Closing Date, and on each December 1
thereafter, a list of all legal holidays in the state in which the Principal
Office of the Trustee is located during the ensuing twelve-month period.
"Carry-Over Amount" shall mean, with respect to a Series 1999-1 Note, the
excess, if any, of (a) the amount of interest on such Note that would have
accrued with respect to the related Interest Period at the Auction Rate over (b)
the amount of interest on such Note actually accrued with respect to such
Interest Period based on the Net Loan Rate, together with the unpaid portion of
any such excess from prior Interest Periods; provided that any reference to
"principal" or "interest" in this First Supplemental Indenture, in the Indenture
and in the Series 1999-1 Notes shall not include, within the meanings of such
words, any Carry-Over Amount or any interest accrued on any Carry-Over Amount.
"Closing Cash Flow Projection" shall mean the Cash Flow Projection
delivered in conjunction with the issuance of the Series 1999-1 Notes.
"Closing Date" shall mean, with respect to the Series 1999-1 Notes,
December 7, 1999, the date of initial issuance and delivery of the Series 1999-1
Notes hereunder.
"Deposit Agent" shall mean, with respect to the Revenue Fund, Norwest Bank
South Dakota, N.A., Aberdeen, South Dakota, and its successor or successors and
any other bank
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<PAGE>
or banking association having trust powers or trust company at any time
substituted in its place pursuant to the Indenture.
"Effective Interest Rate" shall mean, with respect to any Financed Student
Loan, the interest rate per annum borne by such Financed Student Loan after
giving effect to all applicable interest subsidy payments, Special Allowance
Payments, rebate fees on Consolidation Loans and reductions pursuant to borrower
incentives. For this purpose, the Special Allowance Payment rate shall be
computed based upon the average of the bond equivalent rates of 91-day United
States Treasury Bills, or other appropriate rates, auctioned or otherwise
determined during that portion of the then current calendar quarter which ends
on the date as of which the "Effective Interest Rate" is determined.
"Eligible Carry-Over Make-Up Amount" shall mean, with respect to each
Interest Period relating to a series of Series 1999-1 Notes as to which, as of
the first day of such Interest Period, there is any unpaid Carry-Over Amount, an
amount equal to the lesser of (a) interest computed on the principal balance of
such series in respect of such Interest Period at a per annum rate equal to the
excess, if any, of the Net Loan Rate over the Series 1999-1 Note Auction Rate,
and (b) the aggregate Carry-Over Amount remaining unpaid as of the first day of
such Interest Period together with interest accrued and unpaid thereon through
the end of such Interest Period. The Eligible Carry-Over Make-Up Amount shall be
$0.00 for any Interest Period with respect to which the Net Loan Rate equals or
exceeds the Series 1999-1 Note Auction Rate.
"Existing Holder" shall mean (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Holder Registry at the close of business on
the Business Day immediately preceding such Auction and (ii) with respect to and
for the purpose of dealing with the Broker-Dealer in connection with an Auction,
a Person who is a beneficial owner of Series 1999-1 Notes.
"Existing Holder Registry" shall mean the registry of Persons who are
owners of the Series 1999-1 Notes, maintained by the Auction Agent as provided
in the Auction Agent Agreement.
"First Supplemental Indenture" shall mean this First Supplemental Indenture
of Trust, as amended or supplemented in accordance with the terms hereof and of
the Indenture.
"Hold Order" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Initial Auction Agent" shall mean Bankers Trust Company, a New York
banking corporation, its successors and assigns.
"Initial Auction Agent Agreement" shall mean the Auction Agent Agreement,
dated as of December 1, 1999, by and among the Corporation, the Trustee and the
Initial Auction Agent, including any amendment thereof or supplement thereto.
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<PAGE>
"Initial Interest Period" shall mean, as to a series of Series 1999-1
Notes, the period commencing on the Closing Date and continuing through the day
immediately preceding the Initial Interest Rate Adjustment Date for such series.
"Initial Interest Rate Adjustment Date" shall mean, with respect to each
series of Series 1999-1 Notes, February 9, 2000.
"Interest Payment Date" shall mean (i) each regularly scheduled interest
payment date on the Series 1999-1 Notes, which shall be the Business Day
immediately following the expiration of the Initial Interest Period for such
series and each related Auction Period thereafter; or (ii) with respect to the
payment of interest upon redemption or acceleration of a Series 1999-1 Note or
the payment of Defaulted Interest, such date on which such interest is payable
under the Indenture.
"Interest Period" shall mean, with respect to a series of Series 1999-1
Notes, the Initial Interest Period and each period commencing on an Interest
Rate Adjustment Date for such series and ending on the last day before (i) the
next Interest Rate Adjustment Date for such series or (ii) the Stated Maturity
of such series, as applicable.
"Interest Rate Adjustment Date" shall mean, with respect to a series of
Series 1999-1 Notes, the date on which a Series 1999-1 Note Interest Rate for
such series is effective, which shall be the date of commencement of each
Auction Period.
"Interest Rate Determination Date" shall mean, with respect to a series of
Series 1999-1 Notes, the Auction Date, or, if no Auction Date is applicable to
such series, the Business Day immediately preceding the date of commencement of
an Auction Period.
"London Business Day" shall mean any business day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Market Agent" shall mean Salomon Smith Barney Inc., New York, New York, in
such capacity hereunder, or any successor to it in such capacity hereunder.
"Maximum Auction Rate" shall mean:
(1) with respect to a series of Series 1999-1 Senior Notes: (i) for
Auction Periods of thirty-five (35) days or less, either (a) One-Month
LIBOR plus 1.5% (if the ratings assigned by Moody's and Fitch to the Series
1999-1 Senior Notes are at least "Aa3" and "AA-," respectively), (b)
One-Month LIBOR plus 2.5% (if any one of the ratings assigned by Moody's
and Fitch to the Series 1999-1 Senior Notes is less than "Aa3" or "AA-,"
respectively, but is at least "A") or (c) One-Month LIBOR plus 3.5% (if any
one of the ratings assigned by Moody's and Fitch to the Series 1999-1
Senior Notes is less than "A"); or (ii) for Auction Periods of greater than
thirty-five (35) days, either (a) the greater of One-Month LIBOR or
Three-Month
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LIBOR, plus, in either case, 1.5% (if the ratings assigned by Moody's and
Fitch to the Series 1999-1 Senior Notes are at least "Aa3" and "AA-,"
respectively), (b) the greater of One-Month LIBOR or Three-Month LIBOR,
plus, in either case, 2.5% (if any one of the ratings assigned by Moody's
and Fitch to the Series 1999-1 Senior Notes is less than "Aa3" or "AA-,"
respectively, but is at least "A") or (c) the greater of One-Month LIBOR or
Three-Month LIBOR, plus, in either case, 3.5% (if any one of the ratings
assigned by Moody's and Fitch to the Series 1999-1 Senior Notes is less
than "A"); and
(2) with respect to the Series 1999-1C Notes: (i) for Auction Periods
of thirty-five (35) days or less, either (a) One-Month LIBOR plus 2.5% (if
the ratings assigned by Moody's and Fitch to the Series 1999-1C Notes are
at least "A2" and "A," respectively), or (b) One-Month LIBOR plus 3.5% (if
any one of the ratings assigned by Moody's and Fitch to the Series 1999-1C
Notes is less than "A2" or "A," respectively); or (ii) for Auction Periods
of greater than thirty-five (35) days, either (a) the greater of One-Month
LIBOR or Three-Month LIBOR, plus, in either case, 2.5% (if the ratings
assigned by Moody's and Fitch to the Series 1999-1C Notes are at least "A2"
and "A," respectively), or (b) the greater of One-Month LIBOR or
Three-Month LIBOR, plus, in either case, 3.5% (if any one of the ratings
assigned by Moody's and Fitch to the Series 1999-1C Notes is less than "A2"
or "A," respectively).
For purposes of the Auction Agent and the Auction Procedures, the ratings
referred to in this definition shall be the last ratings of which the Auction
Agent shall have been given notice pursuant to the Auction Agent Agreement.
"Net Loan Rate" shall mean, with respect to any Interest Period for a
series of the Series 1999-1 Notes commencing during a given calendar month, the
highest rate of interest per annum, rounded to the next highest .01%, which
would not cause the weighted average of the Auction Rates for such Interest
Period and the two (2) preceding Interest Periods to exceed (1) the average of
the weighted average Effective Interest Rate of the Financed Student Loans,
determined as of the last day of the second, third and fourth preceding months,
less (ii) the Administrative Cost and Note Fee Rate with respect to the Series
1999-1 Notes.
"Non-Payment Rate" shall mean the lesser of (i) One-Month LIBOR plus 1.5%,
and (ii) 18%.
"Note Registrar" shall mean, with respect to the Series 1999-1 Notes, the
Trustee.
"Notice of Fee Rate Change" shall mean a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement.
"One-Month LIBOR" shall mean, with respect to a series of Series 1999-1
Notes, the rate of interest per annum equal to the rate per annum at which
United States dollar deposits having a maturity of one month are offered to
prime banks in the London interbank market which appear on the Reuters Screen
LIBOR Page as of approximately 11:00 a.m., London time, on the applicable
Interest Rate Determination Date. If at least two such quotations appear,
One-Month LIBOR will be the arithmetic mean (rounded upwards, if necessary, to
the nearest .01%) of such offered rates. If fewer than two such quotes appear,
One-Month LIBOR will be determined at
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approximately 11:00 a.m., London time, on the applicable Interest Rate
Determination Date on the basis of the rate at which deposits in United States
dollars having a maturity of one month are offered to prime banks in the London
interbank market by four major banks in the London interbank market selected by
(i) the Auction Agent after consultation with the Trustee or (ii) the Trustee,
as applicable, and in a principal amount of not less than U.S. $1,000,000 and
that is representative for a single transaction in such market at such time. The
Auction Agent or the Trustee, as applicable, will request the principal London
office of each such bank to provide a quotation of its rate. If at least two
quotations are provided, One-Month LIBOR will be the arithmetic mean (rounded
upwards, if necessary, to the nearest .01%) of such offered rates. If fewer than
two quotations are provided, One-Month LIBOR will be the arithmetic mean
(rounded upwards, if necessary, to the nearest .01%) of the rates quoted at
approximately 11:00 a.m., New York City time, on the applicable Interest Rate
Determination Date by three major banks in New York, New York, selected by (x)
the Auction Agent after consultation with the Trustee or (y) the Trustee, as
applicable, for loans in United States dollars to leading European banks having
a maturity of one month and in a principal amount equal to an amount of not less
than U.S. $1,000,000 and that is representative for a single transaction in such
market at such time; provided, however, that if the banks selected as aforesaid
are not quoting as mentioned in this sentence, One-Month LIBOR will be the
One-Month LIBOR in effect for the immediately preceding Interest Period.
"Order" shall have the meaning ascribed to such term in Section 4(a)(i)
hereof.
"Original Indenture" shall mean the Indenture of Trust, dated as of
December 1, 1999, between the Corporation and the Trustee, as originally
executed.
"Participant" shall mean a member of, or participant in, the Securities
Depository.
"Payment Default" shall mean, with respect to a series of Series 1999-1
Notes, (i) a default in the due and punctual payment of any installment of
interest on such series, or (ii) a default in the due and punctual payment of
any interest on and principal of such series at Maturity.
"Paying Agent" shall mean, with respect to the Series 1999-1 Notes, the
Trustee and its successor or successors or any other commercial bank designated
in accordance herewith as a place at which principal of, premium, if any, or
interest on the Series 1999-1 Notes is payable.
"Potential Holder" shall mean any Person (including an Existing Holder that
is (i) a Broker-Dealer when dealing with the Auction Agent and (ii) a potential
beneficial owner when dealing with a Broker-Dealer) who may be interested in
acquiring Series 1999-1 Notes (or, in the case of an Existing Holder thereof, an
additional principal amount of Series 1999-1 Notes).
"Regular Record Date" shall mean with respect to any regularly scheduled
Interest Payment Date occurring with respect to a series of Series 1999-1 Notes,
the last Business Day preceding such Interest Payment Date.
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"Reuters Screen LIBOR Page" shall mean the display designated as page
"LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBOR page for the purposes of displaying London interbank offered
rates of major banks).
"Securities Depository" shall mean The Depository Trust Company, New York,
New York, and its successors and assigns, or, if (i) the then-existing
Securities Depository resigns from its functions as depository of the Series
1999-1 Notes or (ii) the Corporation discontinues use of the Securities
Depository pursuant to Section 17(c) hereof, then any other securities
depository which agrees to follow the procedures required to be followed by a
securities depository in connection with the Series 1999-1 Notes and which is
selected by the Corporation with the consent of the Trustee.
"Sell Order" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Series 1999-1 Capitalized Interest Account" shall mean the Account by that
name created in the Acquisition Fund pursuant to Section 18 of this First
Supplemental Indenture.
"Series 1999-1 Cost of Issuance Account" shall mean the Account by that
name created in the Administration Fund pursuant to Section 18 of this First
Supplemental Indenture.
"Series 1999-1 Notes" shall mean the Series 1999-1A Notes, the Series
1999-1B Notes and the Series 1999-1C Notes.
"Series 1999-1 Note Auction Rate" shall mean the rate of interest per annum
borne by a series of the Series 1999-1 Notes for each Auction Period and
determined in accordance with the provisions of Sections 4 through 12 hereof;
provided, however, that in the event of a Payment Default, the Series 1999-1
Note Auction Rate shall equal the Non-Payment Rate; and provided, further, that
such Series 1999-1 Note Auction Rate shall in no event exceed the Series 1999-1
Note Auction Rate Limitation.
"Series 1999-1 Note Auction Rate Limitation" shall mean a rate per annum
equal to 18% or, if less than such rate, the highest rate the Corporation may
legally pay, from time to time, as interest on the Series 1999-1 Notes.
"Series 1999-1 Note Initial Interest Rate" shall mean 6.23% for the Series
1999- 1A Notes, 6.25% for the Series 1999-1B Notes and 6.30% for the Series
1999-1C Notes.
"Series 1999-1 Note Interest Rate" shall mean the rate of interest per
annum borne by a series of Series 1999-1 Notes, as of the time referred to,
including, without limitation, the Series 1999-1 Note Initial Interest Rate and
the Series 1999-1 Note Auction Rate.
"Series 1999-1 Senior Notes" shall mean the Series 1999-1A Notes and the
Series 1999-1B Notes.
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"Series 1999-1 Transfer Agreement" shall mean the Transfer Agreement, dated
as of December 1, 1999, among the Corporation, the Trustee, GOAL Funding and the
trustee for GOAL Funding, as from time to time amended or supplemented.
"Series 1999-1A Notes" shall mean the Notes created and to be issued under
this First Supplemental Indenture in the original principal amount of
$78,000,000 and designated as the "Student Loan Asset-Backed Notes, Senior
Series 1999-1A."
"Series 1999-1B Notes" shall mean the Notes created and to be issued under
this First Supplemental Indenture in the original principal amount of
$39,000,000 and designated as the "Student Loan Asset-Backed Notes, Senior
Series 1999-1B."
"Series 1999-1C Notes" shall mean the Notes created and to be issued under
this First Supplemental Indenture in the original principal amount of $9,300,000
and designated as the "Student Loan Asset-Backed Notes, Subordinate Series
1999-1C."
"Special Redemption and Prepayment Account Requirement" shall mean an
amount, as of any Monthly Payment Date, with respect to the Series 1999-1 Notes,
equal to $0.00.
"Submission Deadline" shall mean 12:30 p.m., New York City time, on any
Auction Date or such other time on any Auction Date by which Broker-Dealers are
required to submit Orders to the Auction Agent as specified by the Auction Agent
from time to time.
"Submitted Bid" shall have the meaning ascribed to such term in Section
4(c)(i) hereof.
"Submitted Hold Order" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Submitted Order" shall have the meaning ascribed to such term in Section
4(c)(i) hereof.
"Submitted Sell Order" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Substitute Auction Agent" shall mean the Person with whom the Trustee
enters into a Substitute Auction Agent Agreement.
"Substitute Auction Agent Agreement" shall mean an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section 8 of
this First Supplemental Indenture agrees with the Trustee and the Corporation to
perform the duties of the Auction Agent under this First Supplemental Indenture.
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"Sufficient Bids" shall have the meaning ascribed to such term in Section
4(c)(i) hereof.
"Three-Month LIBOR" shall mean, with respect to a series of Series 1999-1
Notes, the rate of interest per annum equal to the rate per annum at which
United States dollar deposits having a maturity of three months are offered to
prime banks in the London interbank market which appear on the Reuters Screen
LIBOR Page as of approximately 11:00 a.m., London time, on the applicable
Interest Rate Determination Date. If at least two such quotations appear,
Three-Month LIBOR will be the arithmetic mean (rounded upwards, if necessary, to
the nearest .01%) of such offered rates. If fewer than two such quotes appear,
Three-Month LIBOR will be determined at approximately 11:00 a.m., London time,
on the applicable Interest Rate Determination Date on the basis of the rate at
which deposits in United States dollars having a maturity of three months are
offered to prime banks in the London interbank market by four major banks in the
London interbank market selected by (i) the Auction Agent after consultation
with the Trustee or (ii) the Trustee, as applicable, and in a principal amount
of not less than U.S. $1,000,000 and that is representative for a single
transaction in such market at such time. The Auction Agent or the Trustee, as
applicable, will request the principal London office of each of such banks to
provide a quotation of its rate. If at least two quotations are provided, Three-
Month LIBOR will be the arithmetic mean (rounded upwards, if necessary, to the
nearest .01%) of such offered rates. If fewer than two quotations are provided,
Three-Month LIBOR will be the arithmetic mean (rounded upwards, if necessary, to
the nearest .01%) of the rates quoted at approximately 11:00 a.m., New York City
time on the applicable Interest Rate Determination Date by three major banks in
New York, New York, selected by (x) the Auction Agent after consultation with
the Trustee or (y) the Trustee, as applicable, for loans in United States
dollars to leading European banks having a maturity of three months and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, Three-Month LIBOR will be the Three-Month LIBOR in effect for the
immediately preceding Interest Period.
Section 2. Authorization and Terms of Series 1999-1 Notes.
There is hereby created and there shall be (1) a series of Class A Notes
entitled "Student Loan Asset-Backed Notes, Senior Series 1999-1A," (2) a series
of Class A Notes entitled "Student Loan Asset-Backed Notes, Senior Series
1999-1B," and (3) a series of Class B Notes entitled "Student Loan Asset-Backed
Notes, Subordinate Series 1999-1C." The aggregate principal amount of the Series
1999-1A Notes that may be authenticated and delivered and Outstanding under the
Indenture is limited to and shall not exceed $78,000,000. The aggregate
principal amount of the Series 1999-1B Notes that may be authenticated and
delivered and Outstanding under the Indenture is limited to and shall not exceed
$39,000,000. The aggregate principal amount of the Series 1999-1C Notes that may
be authenticated and delivered and Outstanding under the Indenture is limited to
and shall not exceed $9,300,000.
The Series 1999-1A Notes shall consist of Term Notes with a Stated Maturity
on December 1, 2035.
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The Series 1999-1B Notes shall consist of Term Notes with a Stated Maturity
on December 1, 2035.
The Series 1999-1C Notes shall consist of Term Notes with a Stated Maturity
on December 1, 2035.
Each series of Series 1999-1 Notes shall bear interest at a rate per annum
equal to the applicable Series 1999-1 Note Interest Rate (which, after the
Initial Interest Period, shall be the Series 1999-1 Note Auction Rate), and at
the same rate per annum (to the extent that the payment of such interest shall
be legally enforceable) on overdue installments of interest.
The Series 1999-1 Notes shall be issued as fully registered Notes without
coupons in Authorized Denominations.
The Series 1999-1 Notes shall be dated as provided in Section 3.9 of the
Indenture and shall bear interest from their date until payment of principal has
been made or duly provided for. The date of original issue of the Series 1999-1
Notes shall be the Closing Date. The Series 1999-1 Notes of each series shall be
numbered in such manner as the Note Registrar shall determine.
Interest on each series of Series 1999-1 Notes shall be computed on the
basis of actual days elapsed and accrue daily from the date thereof (on the
basis of a 360-day year), and shall be payable on each regularly scheduled
Interest Payment Date with respect to such series prior to the Maturity thereof
and at the Maturity thereof. The interest payable on each Interest Payment Date
for each series of the Series 1999-1 Notes shall be that interest which has
accrued through the last day of the last complete Interest Period immediately
preceding the Interest Payment Date or, in the case of the Maturity of such
series, the last day preceding the date of such Maturity. The applicable Series
1999-1 Note Interest Rate shall be effective as of and on the first day (whether
or not a Business Day) of the applicable Interest Period and be in effect
thereafter through the end of such Interest Period.
The principal of and premium, if any, on the Series 1999-1 Notes, together
with interest payable on the Series 1999-1 Notes at the Maturity thereof if the
date of such Maturity is not a regularly scheduled Interest Payment Date, shall
be payable in lawful money of the United States of America upon, except as
otherwise provided in Section 17 hereof, presentation and surrender of such
Series 1999-1 Notes at the Principal Office of the Trustee, as Paying Agent with
respect to the Series 1999-1 Notes, or a duly appointed successor Paying Agent.
Interest on the Series 1999-1 Notes shall be payable on each regularly scheduled
Interest Payment Date, except as otherwise provided in Section 17 hereof, by
check or draft drawn upon the Paying Agent and mailed to the person who is the
Holder thereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the Regular Record Date for such Interest Payment
Date at the address of such Holder as it appears on the Note Register, or, in
the case of any Series 1999-1 Note the Holder of which is the Holder of Series
1999-1 Notes in the aggregate principal amount of $1,000,000 or more, at the
direction of such Holder received by the Paying Agent by 5:00 p.m. in the city
in which the Principal Office of the Paying Agent is located on the last
Business Day preceding the applicable Regular Record Date, by electronic
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transfer by the Paying Agent in immediately available funds to an account
designated by such Holder. Any interest not so timely paid or duly provided for
(herein referred to as "Defaulted Interest") shall cease to be payable to the
person who is the Holder thereof at the close of business on the Regular Record
Date and shall be payable to the person who is the Holder thereof at the close
of business on a Special Record Date for the payment of any such Defaulted
Interest. Such Special Record Date shall be fixed by the Trustee whenever moneys
become available for payment of the Defaulted Interest, and notice of the
Special Record Date shall be given to the Holders of the Series 1999-1 Notes not
less than ten (10) days prior thereto by first-class mail to each such Holder as
shown on the Note Register on a date selected by the Trustee, stating the date
of the Special Record Date and the date fixed for the payment of such Defaulted
Interest. All payments of principal of and interest on the Series 1999-1 Notes
shall be made in lawful money of the United States of America.
The Series 1999-1 Notes are subject to redemption prior to their Stated
Maturities upon the terms and conditions and at the Redemption Prices specified
in Section 16 hereof.
Subject to the provisions of the Indenture, the Series 1999-1 Senior Notes
shall be in substantially the form set forth in Exhibit A hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
Subject to the provisions of the Indenture, the Series 1999-1C Notes shall
be in substantially the form set forth in Exhibit B hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
Section 3. Interest Payable on Series 1999-1 Notes. The Initial Interest
Rate Adjustment Dates for each series of Series 1999-1 Notes shall be February
9, 2000.
During the Initial Interest Period, each series of Series 1999-1 Notes
shall bear interest at the Series 1999-1 Note Initial Interest Rate for such
series. Thereafter, except with respect to an Auction Period Adjustment, the
Series 1999-1 Notes shall bear interest at a Series 1999-1 Note Auction Rate
based on a 28-day Auction Period, as determined pursuant to this Section 3 and
Sections 4 through 12 hereof.
The Series 1999-1 Note Auction Rate to be borne by each series of Series
1999-1 Notes after such Initial Interest Period for each Auction Period until an
Auction Period Adjustment, if any, shall be determined as hereinbelow described.
Each such Auction Period shall commence on and include the Wednesday (or, if
such Wednesday is not a Business Day, the next succeeding Business Day)
following the expiration of the immediately preceding Auction Period and
terminate on and include the last day immediately preceding the Wednesday (or,
if such Wednesday is not a Business Day, the next succeeding Business Day) of
the fourth
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following week; provided, however, that in the case of the Auction Period that
immediately follows the Initial Interest Period for a series of Series 1999-1
Notes, such Auction Period shall commence on the Initial Interest Rate
Adjustment Date for such series. The Series 1999-1 Note Auction Rate on each
series of Series 1999-1 Notes for each Auction Period shall be the lesser of (i)
the Net Loan Rate in effect for such Auction Period and (ii) the Auction Rate in
effect for such Auction Period as determined in accordance with Section 4
hereof; provided that if, on any Interest Rate Determination Date, an Auction is
not held for any reason, then the Series 1999-1 Note Auction Rate on such series
for the next succeeding Auction Period shall equal the lesser of (i) the Maximum
Auction Rate and (ii) the Net Loan Rate.
Notwithstanding the foregoing:
(a) if the ownership of a series of Series 1999-1 Notes is no longer
maintained in Book-Entry Form, the Series 1999-1 Note Auction Rate on such
series for any Interest Period commencing after the delivery of definitive
notes representing such series pursuant to Section 17 hereof shall equal
the lesser of (i) the Maximum Auction Rate and (ii) the Net Loan Rate on
the Business Day immediately preceding the first day of such subsequent
Interest Period; or
(b) if a Payment Default shall have occurred with respect to a series
of Series 1999-1 Notes, the Series 1999-1 Note Auction Rate on such series
for the Interest Period commencing on or immediately after such Payment
Default, and for each Interest Period thereafter, to and including the
Interest Period, if any, during which, or commencing less than two (2)
Business Days after, such Payment Default is cured, shall equal the Non-
Payment Rate on the first day of each such Interest Period.
In accordance with Section 4(c)(iii) hereof, the Auction Agent shall
promptly give written notice to the Trustee and the Corporation of each Series
1999-1 Note Auction Rate (unless the Series 1999-1 Note Auction Rate is the
Non-Payment Rate or the ownership of such series is no longer maintained in
Book-Entry Form) and either the Auction Rate or the Net Loan Rate, as the case
may be, when such rate is not the Series 1999-1 Note Auction Rate, applicable to
each series of Series 1999-1 Notes. The Trustee shall notify the Holders of
Series 1999-1 Notes of the Series 1999-1 Note Auction Rate applicable to each
such series for each Auction Period on the second Business Day of such Auction
Period.
In the event that the last Business Day immediately preceding what would
otherwise be the commencement date of an Auction Period for a series of Series
1999-1 Notes is more than five days prior to such date, the Interest Rate
Determination Date and commencement date for such Auction Period, as well as the
expiration date for the preceding Auction Period, may be adjusted to fall on
such dates as the Market Agent, with the consent of the Corporation, may
determine to be appropriate under such circumstances. The Market Agent shall
promptly notify the Trustee and the Auction Agent in writing of any such
determination. The Trustee, upon receipt of such notice, shall immediately give
written notification of such determination to the Holders of such series of
Series 1999-1 Notes.
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Notwithstanding any other provision of the Series 1999-1 Notes or this
First Supplemental Indenture, and except for the occurrence of a Payment
Default, interest payable on each series of the Series 1999-1 Notes for an
Auction Period shall never exceed for such Auction Period the amount of interest
payable at the Net Loan Rate (subject to the Series 1999-1 Note Auction Rate
Limitation) in effect for such Auction Period.
If the Auction Rate for a series of Series 1999-1 Notes is greater than the
Net Loan Rate, then the Series 1999-1 Note Auction Rate applicable to such
series for that Interest Period will be the Net Loan Rate. If the Series 1999-1
Note Auction Rate for a series of Series 1999-1 Notes for any Interest Period is
the Net Loan Rate, the Trustee shall determine the Carry- Over Amount, if any,
with respect to such series for such Interest Period. Such determination of the
Carry-Over Amount shall be made separately for each series of Series 1999-1
Notes. Each Carry-Over Amount shall bear interest calculated at a rate equal to
One-Month LIBOR (as determined by the Auction Agent, provided the Trustee has
received notice of One-Month LIBOR from the Auction Agent, and, if the Trustee
shall not have received such notice from the Auction Agent, then as determined
by the Trustee) from the Interest Payment Date for the Interest Period with
respect to which such Carry-Over Amount was calculated, until paid. Any payment
in respect of Carry-Over Amount shall be applied, first, to any accrued interest
payable thereon and, thereafter, in reduction of such Carry-Over Amount. For
purposes of this First Supplemental Indenture, the Indenture and the Series
1999-1 Notes, any reference to "principal" or "interest" herein and therein
shall not include, within the meaning of such words, Carry-Over Amount or any
interest accrued on any such Carry-Over Amount. Such Carry-Over Amount shall be
separately calculated for each Series 1999-1 Note of such series by the Trustee
during such Interest Period in sufficient time for the Trustee to give notice to
each Holder of such Carry- Over Amount as required in the next succeeding
sentence. On the Interest Payment Date for an Interest Period with respect to
which such Carry-Over Amount has been calculated by the Trustee, the Trustee
shall give written notice to each Holder of the Carry-Over Amount applicable to
such Holder's Series 1999-1 Note, which written notice may accompany the payment
of interest by check made to each such Holder on such Interest Payment Date or
otherwise shall be mailed on such Interest Payment Date by first-class mail,
postage prepaid, to each such Holder at such Holder's address as it appears on
the registration books maintained by the Note Registrar. Such notice shall
state, in addition to such Carry-Over Amount, that, unless and until a Series
1999-1 Note has been redeemed or has been deemed no longer Outstanding under the
Indenture (after which all accrued Carry-Over Amount with respect to such Series
1999-1 Note (and all accrued interest thereon) that remains unpaid shall be
cancelled and no Carry-Over Amount (or interest accrued thereon) shall be paid
with respect to such Series 1999-1 Note), (i) the Carry-Over Amount (and
interest accrued thereon) shall be paid by the Trustee on such Series 1999-1
Note on the first occurring Interest Payment Date for a subsequent Interest
Period if and to the extent that (l) the Eligible Carry-Over Make-Up Amount with
respect to such Interest Period is greater than zero, and (2) moneys are
available pursuant to the terms of this First Supplemental Indenture to pay such
Carry-Over Amount (and interest accrued thereon), and (ii) interest shall accrue
on the Carry-Over Amount at a per annum rate equal to One-Month LIBOR until such
Carry-Over Amount is paid in full or is cancelled.
The Carry-Over Amount (and interest accrued thereon) for a series of Series
1999-1 Notes shall be paid by the Trustee on Outstanding Series 1999-1 Notes of
such series on the
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first occurring Interest Payment Date for a subsequent Interest Period if and to
the extent that (i) the Eligible Carry-Over Make-Up Amount with respect to such
Interest Period is greater than zero, and (ii) moneys in the Surplus Account are
available on such Interest Payment Date for transfer to the Interest Account for
such purpose in accordance with the second paragraph of Section 4.8 of the
Indenture, after taking into account all other amounts payable from the Surplus
Fund in accordance with such paragraph on such Interest Payment Date. Any
Carry-Over Amount (and any interest accrued thereon) with respect to any Series
1999-1 Note which is unpaid as of an Interest Payment Date, which Series 1999-1
Note is to be redeemed or deemed no longer Outstanding under this First
Supplemental Indenture on such Interest Payment Date, shall be paid to the
Holder thereof on such Interest Payment Date to the extent that moneys are
available therefor in accordance with the provisions of the preceding clause
(ii); provided, however, that any Carry-Over Amount (and any interest accrued
thereon) which is not so paid on such Interest Payment Date shall be cancelled
with respect to such Series 1999-1 Note on such Interest Payment Date and shall
not be paid on any succeeding Interest Payment Date. To the extent that any
portion of the Carry-Over Amount (and any interest accrued thereon) remains
unpaid after payment of a portion thereof, such unpaid portion shall be paid in
whole or in part as required hereunder until fully paid by the Trustee on the
next occurring Interest Payment Date or Dates, as necessary, for a subsequent
Interest Period or Periods, if and to the extent that the conditions in the
first sentence of this paragraph are satisfied. On any Interest Payment Date on
which the Trustee pays less than all of the Carry-Over Amount (and any interest
accrued thereon) with respect to a Series 1999-1 Note, the Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph to
the Holder of such Series 1999-1 Note of the Carry- Over Amount remaining unpaid
on such Series 1999-1 Note.
The Interest Payment Date on which any Carry-Over Amount (or any interest
accrued thereon) for a series of Series 1999-1 Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
(and any interest accrued thereon) in the same manner as, and from the same
Account from which, it pays interest on the Series 1999-1 Notes on an Interest
Payment Date.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Series 1999-1 Note Auction Rate with respect to a
series of Series 1999-1 Notes, or, if for any reason, such manner of
determination shall be held to be invalid or unenforceable, the Series 1999-1
Note Auction Rate for the next succeeding Interest Period (which Interest Period
shall be an Auction Period for such series of Series 1999-1 Notes) shall be the
Net Loan Rate. The Net Loan Rate with respect to each Interest Rate
Determination Date shall be determined and communicated to the Auction Agent and
the Trustee in accordance with Section 6 hereof.
Section 4. Determining the Series 1999-1 Note Auction Rate. By purchasing
Series 1999-1 Notes, whether in an Auction or otherwise, each purchaser of the
Series 1999-1 Notes, or its Broker-Dealer, must agree and shall be deemed by
such purchase to have agreed (i) to participate in Auctions on the terms
described herein, (ii) to have its beneficial ownership of the Series 1999-1
Notes maintained at all times in Book-Entry Form for the account of its
Participant, which in turn will maintain records of such beneficial ownership,
and (iii) to
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authorize such Participant to disclose to the Auction Agent such information
with respect to such beneficial ownership as the Auction Agent may request.
So long as the ownership of a series of Series 1999-1 Notes is maintained
in Book-Entry Form by the Securities Depository, an Existing Holder may sell,
transfer or otherwise dispose of Series 1999-1 Notes of such series only
pursuant to a Bid or Sell Order placed in an Auction or otherwise sell, transfer
or dispose of Series 1999-1 Notes through a Broker-Dealer, provided that, in the
case of all transfers other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Participant advises the Auction Agent of such transfer.
Auctions shall be conducted on each Auction Date, if there is an Auction Agent
on such Auction Date, in the following manner (such procedures to be applicable
separately to each series of the Series 1999-1 Notes):
(a) (i) Prior to the Submission Deadline on each Auction Date;
(A) each Existing Holder of Series 1999-1 Notes may submit to a
Broker-Dealer by telephone or otherwise any information as to:
(1) the principal amount of Outstanding Series 1999-1 Notes,
if any, owned by such Existing Holder which such Existing Holder
desires to continue to own without regard to the Series 1999-1
Note Auction Rate for the next succeeding Auction Period;
(2) the principal amount of Outstanding Series 1999-1 Notes,
if any, which such Existing Holder offers to sell if the Series
1999-1 Note Auction Rate for the next succeeding Auction Period
shall be less than the rate per annum specified by such Existing
Holder; and/or
(3) the principal amount of Outstanding Series 1999-1 Notes,
if any, owned by such Existing Holder which such Existing Holder
offers to sell without regard to the Series 1999-1 Note Auction
Rate for the next succeeding Auction Period; and
(B) one or more Broker-Dealers may contact Potential Holders to
determine the principal amount of Series 1999-1 Notes which each
Potential Holder offers to purchase, if the Series 1999-1 Note Auction
Rate for the next succeeding Auction Period shall not be less than the
rate per annum specified by such Potential Holder.
The statement of an Existing Holder or a Potential Holder
referred to in (A) or (B) of this paragraph (i) is herein referred to
as an "Order," and each Existing Holder and each Potential Holder
placing an Order is herein referred to as a "Bidder"; an Order
described in clause (A)(1) is herein referred to as a "Hold Order"; an
Order described in clauses (A)(2) and (B) is herein referred to as a
"Bid"; and an Order described in clause (A)(3) is herein referred to
as a "Sell Order."
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(ii) (A) Subject to the provisions of Section 4(b) hereof, a Bid by an
Existing Holder shall constitute an irrevocable offer to sell:
(1) the principal amount of Outstanding Series 1999-1 Notes
specified in such Bid if the Series 1999-1 Note Auction Rate
determined as provided in this Section 4 shall be less than the
rate specified therein; or
(2) such principal amount, or a lesser principal amount of
Outstanding Series 1999-1 Notes to be determined as set forth in
Section 4(d)(i)(D) hereof, if the Series 1999-1 Note Auction Rate
determined as provided in this Section 4 shall be equal to the
rate specified therein; or
(3) such principal amount, or a lesser principal amount of
Outstanding Series 1999-1 Notes to be determined as set forth in
Section 4(d)(ii)(C) hereof, if the rate specified therein shall
be higher than the Series 1999-1 Note Auction Rate and Sufficient
Bids have not been made.
(B) Subject to the provisions of Section 4(b) hereof, a Sell
Order by an Existing Holder shall constitute an irrevocable offer to
sell:
(l) the principal amount of Outstanding Series 1999-1 Notes
specified in such Sell Order; or
(2) such principal amount, or a lesser principal amount, of
Outstanding Series 1999-1 Notes set forth in Section 4(d)(ii)(C)
hereof, if Sufficient Bids have not been made.
(C) Subject to the provisions of Section 4(b) hereof, a Bid by a
Potential Holder shall constitute an irrevocable offer to purchase:
(1) the principal amount of Outstanding Series 1999-1 Notes
specified in such Bid if the Series 1999-1 Note Auction Rate
determined as provided in this Section 4 shall be higher than the
rate specified in such Bid; or
(2) such principal amount, or a lesser principal amount of
Outstanding Series 1999-1 Notes set forth in Section 4(d)(i)(E)
hereof, if the Series 1999-1 Note Auction Rate determined as
provided in this Section 4 shall be equal to the rate specified
in such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders obtained by
such Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
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(B) the aggregate principal amount of Series 1999-1 Notes that
are the subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
(1) the principal amount of Series 1999-1 Notes, if any,
subject to any Hold Order placed by such Existing Holder;
(2) the principal amount of Series 1999-1 Notes, if any,
subject to any Bid placed by such Existing Holder and the rate
specified in such Bid; and
(3) the principal amount of Series 1999-1 Notes, if any,
subject to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate
specified in such Potential Holder's Bid.
(ii) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such rate
up to the next higher .001%.
(iii) If an Order or Orders covering all Outstanding Series 1999-1
Notes owned by an Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order
to have been submitted on behalf of such Existing Holder covering the
principal amount of Outstanding Series 1999-1 Notes owned by such Existing
Holder and not subject to an Order submitted to the Auction Agent.
(iv) Neither the Corporation, the Trustee nor the Auction Agent shall
be responsible for any failure of a Broker-Dealer to submit an Order to the
Auction Agent on behalf of any Existing Holder or Potential Holder.
(v) If any Existing Holder submits through a Broker-Dealer to the
Auction Agent one or more Orders covering in the aggregate more than the
principal amount of Outstanding Series 1999-1 Notes owned by such Existing
Holder, such Orders shall be considered valid as follows and in the
following order of priority:
(A) All Hold Orders shall be considered valid, but only up to the
aggregate principal amount of Outstanding Series 1999-1 Notes owned by
such Existing Holder, and if the aggregate principal amount of Series
1999-1 Notes subject to such Hold Orders exceeds the aggregate
principal amount of Series 1999-1 Notes owned by such Existing Holder,
the aggregate principal amount of Series 1999-1 Notes subject to each
such Hold Order shall be reduced pro rata so that the aggregate
principal amount of Series 1999-1 Notes subject to such Hold Order
equals the aggregate principal amount of Outstanding Series 1999-1
Notes owned by such Existing Holder.
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(B) (1) any Bid shall be considered valid up to an amount equal to the
excess of the principal amount of Outstanding Series 1999-1 Notes
owned by such Existing Holder over the aggregate principal amount of
Series 1999-1 Notes subject to any Hold Order referred to in clause
(A) of this paragraph (v);
(2) subject to subclause (1) of this clause (B), if more than one
Bid with the same rate is submitted on behalf of such Existing Holder
and the aggregate principal amount of Outstanding Series 1999-1 Notes
subject to such Bids is greater than such excess, such Bids shall be
considered valid up to an amount equal to such excess;
(3) subject to subclauses (1) and (2) of this clause (B), if more
than one Bid with different rates are submitted on behalf of such
Existing Holder, such Bids shall be considered valid first in the
ascending order of their respective rates until the highest rate is
reached at which such excess exists and then at such rate up to the
amount of such excess; and
(4) in any such event, the amount of Outstanding Series 1999-1
Notes, if any, subject to Bids not valid under this clause (B) shall
be treated as the subject of a Bid by a Potential Holder at the rate
therein specified; and
(C) All Sell Orders shall be considered valid up to an amount equal to
the excess of the principal amount of Outstanding Series 1999-1 Notes owned
by such Existing Holder over the aggregate principal amount of Series
1999-1 Notes subject to Hold Orders referred to in clause (A) of this
paragraph (v) and valid Bids referred to in clause (B) of this paragraph
(v).
(vi) If more than one Bid for Series 1999-1 Notes is submitted on behalf of
any Potential Holder, each Bid submitted shall be a separate Bid with the rate
and principal amount therein specified.
(vii) An Existing Holder that offers to purchase additional Series 1999-1
Notes is, for purposes of such offer, treated as a Potential Holder.
(viii) Any Bid or Sell Order submitted by an Existing Holder covering an
aggregate principal amount of Series 1999-1 Notes not equal to an Authorized
Denomination shall be rejected and shall be deemed a Hold Order. Any Bid
submitted by a Potential Holder covering an aggregate principal amount of Series
1999-1 Notes not equal to an Authorized Denomination shall be rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction Rate will
(a) be treated as a Sell Order if submitted by an Existing Holder and (b) not be
accepted if submitted by a Potential Holder.
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(x) Any Order submitted in an Auction by a Broker-Dealer to the Auction
Agent prior to the Submission Deadline on any Auction Date shall be irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all valid Orders submitted or deemed submitted to
it by the Broker- Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being herein referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as a
"Submitted Order," and collectively as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted Orders") and
shall determine:
(A) the excess of the total principal amount of Outstanding Series
1999-1 Notes over the sum of the aggregate principal amount of Outstanding
Series 1999- 1 Notes subject to Submitted Hold Orders (such excess being
herein referred to as the "Available Series 1999-1 Notes"), and
(B) from the Submitted Orders whether:
(1) the aggregate principal amount of Outstanding Series 1999-1
Notes subject to Submitted Bids by Potential Holders specifying one or
more rates equal to or lower than the Maximum Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding Series 1999-1
Notes subject to Submitted Bids by Existing Holders specifying one or
more rates higher than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding Series 1999-1
Notes subject to Submitted Sell Orders;
(in the event such excess or such equality exists, other than because all
of the Outstanding Series 1999-1 Notes are subject to Submitted Hold
Orders, such Submitted Bids described in subclause (1) above shall be
referred to collectively as "Sufficient Bids"); and
(C) if Sufficient Bids exist, the Bid Auction Rate, which shall be the
lowest rate specified in such Submitted Bids such that if:
(l) (x) each such Submitted Bid from Existing Holders specifying
such lowest rate and (y) all other Submitted Bids from Existing
Holders specifying lower rates were rejected, thus entitling such
Existing Holders to continue to own the principal amount of Series
1999-1 Notes subject to such Submitted Bids; and
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(2) (x) each such Submitted Bid from Potential Holders specifying
such lowest rate and (y) all other Submitted Bids from Potential
Holders specifying lower rates were accepted;
the result would be that such Existing Holders described in subclause (1)
above would continue to own an aggregate principal amount of Outstanding
Series 1999-1 Notes which, when added to the aggregate principal amount of
Outstanding Series 1999-1 Notes to be purchased by such Potential Holders
described in subclause (2) above, would equal not less than the Available
Series 1999-1 Notes.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 4(c)(i) hereof, the Auction Agent shall advise the
Trustee, the Broker-Dealers and the Corporation of the Net Loan Rate, the
Maximum Auction Rate and the All Hold Rate and the components thereof on
the Auction Date and, based on such determinations, the Auction Rate for
the next succeeding Interest Period as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Interest Period shall be equal to the Bid Auction Rate so
determined;
(B) if Sufficient Bids do not exist (other than because all of
the Outstanding Series 1999-1 Notes are subject to Submitted Hold
Orders), that the Auction Rate for the next succeeding Interest Period
shall be equal to the Maximum Auction Rate; or
(C) if all Outstanding Series 1999-1 Notes are subject to
Submitted Hold Orders, that the Auction Rate for the next succeeding
Interest Period shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction
Rate, the Auction Agent shall determine and advise the Trustee of the
Series 1999-1 Note Auction Rate, which rate shall be the lesser of (a) the
Auction Rate and (b) the Net Loan Rate; provided, however, that in no event
shall the Series 1999-1 Note Auction Rate exceed the Series 1999-1 Note
Auction Rate Limitation.
(d) Existing Holders shall continue to own the principal amount of Series
1999-1 Notes that are subject to Submitted Hold Orders. If the Net Loan Rate is
equal to or greater than the Bid Auction Rate and if Sufficient Bids have been
received by the Auction Agent, the Bid Auction Rate will be the Series 1999-1
Note Auction Rate, and Submitted Bids and Submitted Sell Orders will be accepted
or rejected and the Auction Agent will take such other action as described below
in subparagraph (i).
If the Net Loan Rate is less than the Auction Rate, the Net Loan Rate will
be the Series 1999-1 Note Auction Rate. If the Auction Rate and the Net Loan
Rate are both greater than the Series 1999-1 Note Auction Rate Limitation, the
Series 1999-1 Note Auction Rate shall be equal to the Series 1999-1 Note Auction
Rate Limitation. If the Auction Agent has not received Sufficient Bids (other
than because all of the Outstanding Series 1999-1 Notes are subject to
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Submitted Hold Orders), the Series 1999-1 Note Auction Rate will be the lesser
of the Maximum Auction Rate and the Net Loan Rate. In any of the cases described
above, Submitted Orders will be accepted or rejected and the Auction Agent will
take such other action as described below in subparagraph (ii).
(i) if Sufficient Bids have been made and the Net Loan Rate is equal
to or greater than the Bid Auction Rate (in which event the Series 1999-1
Note Auction Rate shall be the Bid Auction Rate), all Submitted Sell Orders
shall be accepted and, subject to the provisions of paragraphs (iv) and (v)
of this Section 4(d), Submitted Bids shall be accepted or rejected as
follows in the following order of priority, and all other Submitted Bids
shall be rejected:
(A) Existing Holders' Submitted Bids specifying any rate that is
higher than the Series 1999-1 Note Auction Rate shall be accepted, thus
requiring each such Existing Holder to sell the aggregate principal amount
of Series 1999-1 Notes subject to such Submitted Bids;
(B) Existing Holders' Submitted Bids specifying any rate that is lower
than the Series 1999-1 Note Auction Rate shall be rejected, thus entitling
each such Existing Holder to continue to own the aggregate principal amount
of Series 1999-1 Notes subject to such Submitted Bids;
(C) Potential Holders' Submitted Bids specifying any rate that is
lower than the Series 1999-1 Note Auction Rate shall be accepted;
(D) Each Existing Holders' Submitted Bid specifying a rate that is
equal to the Series 1999-1 Note Auction Rate shall be rejected, thus
entitling such Existing Holder to continue to own the aggregate principal
amount of Series 1999-1 Notes subject to such Submitted Bid, unless the
aggregate principal amount of Outstanding Series 1999-1 Notes subject to
all such Submitted Bids shall be greater than the principal amount of
Series 1999-1 Notes (the "remaining principal amount") equal to the excess
of the Available Series 1999-1 Notes over the aggregate principal amount of
Series 1999-1 Notes subject to Submitted Bids described in clauses (B) and
(C) of this Section 4(d)(i), in which event such Submitted Bid of such
Existing Holder shall be rejected in part, and such Existing Holder shall
be entitled to continue to own the principal amount of Series 1999-1 Notes
subject to such Submitted Bid, but only in an amount equal to the aggregate
principal amount of Series 1999-1 Notes obtained by multiplying the
remaining principal amount by a fraction, the numerator of which shall be
the principal amount of Outstanding Series 1999-1 Notes owned by such
Existing Holder subject to such Submitted Bid and the denominator of which
shall be the sum of the principal amount of Outstanding Series 1999-1 Notes
subject to such Submitted Bids made by all such Existing Holders that
specified a rate equal to the Series 1999-1 Note Auction Rate; and
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(E) Each Potential Holder's Submitted Bid specifying a rate that is
equal to the Series 1999-1 Note Auction Rate shall be accepted, but only in
an amount equal to the principal amount of Series 1999-1 Notes obtained by
multiplying the excess of the aggregate principal amount of Available
Series 1999-1 Notes over the aggregate principal amount of Series 1999-1
Notes subject to Submitted Bids described in clauses (B), (C) and (D) of
this Section 4(d)(i) by a fraction the numerator of which shall be the
aggregate principal amount of Outstanding Series 1999-1 Notes subject to
such Submitted Bid and the denominator of which shall be the sum of the
principal amount of Outstanding Series 1999-1 Notes subject to Submitted
Bids made by all such Potential Holders that specified a rate equal to the
Series 1999-1 Note Auction Rate.
(ii) If Sufficient Bids have not been made (other than because all of the
Outstanding Series 1999-1 Notes are subject to Submitted Hold Orders), or if the
Net Loan Rate is less than the Bid Auction Rate (in which event the Series
1999-1 Note Auction Rate shall be the Net Loan Rate), or if the Series 1999-1
Note Auction Rate Limitation applies, subject to the provisions of Section
4(d)(iv) hereof, Submitted Orders shall be accepted or rejected as follows in
the following order of priority and all other Submitted Bids shall be rejected:
(A) Existing Holders' Submitted Bids specifying any rate that is equal
to or lower than the Series 1999-1 Note Auction Rate shall be rejected,
thus entitling such Existing Holders to continue to own the aggregate
principal amount of Series 1999-1 Notes subject to such Submitted Bids;
(B) Potential Holders' Submitted Bids specifying (1) any rate that is
equal to or lower than the Series 1999-1 Note Auction Rate shall be
accepted and (2) any rate that is higher than the Series 1999-1 Note
Auction Rate shall be rejected; and
(C) each Existing Holder's Submitted Bid specifying any rate that is
higher than the Series 1999-1 Note Auction Rate and the Submitted Sell
Order of each Existing Holder shall be accepted, thus entitling each
Existing Holder that submitted any such Submitted Bid or Submitted Sell
Order to sell the Series 1999-1 Notes subject to such Submitted Bid or
Submitted Sell Order, but in both cases only in an amount equal to the
aggregate principal amount of Series 1999-1 Notes obtained by multiplying
the aggregate principal amount of Series 1999-1 Notes subject to Submitted
Bids described in clause (B) of this Section 4(d)(ii) by a fraction the
numerator of which shall be the aggregate principal amount of Outstanding
Series 1999-1 Notes owned by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and the denominator of which shall be the
aggregate principal amount of Outstanding Series 1999-1 Notes subject to
all such Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Series 1999-1 Notes are subject to Submitted Hold
Orders, all Submitted Bids shall be rejected.
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(iv) If, as a result of the procedures described in paragraph (i) or
(ii) of this Section 4(d), any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or required to
purchase, a principal amount of Series 1999-1 Notes that is not equal to an
Authorized Denomination, the Auction Agent shall, in such manner as in its
sole discretion it shall determine, round up or down the principal amount
of Series 1999-1 Notes to be purchased or sold by any Existing Holder or
Potential Holder so that the principal amount of Series 1999-1 Notes
purchased or sold by each Existing Holder or Potential Holder shall be
equal to an Authorized Denomination.
(v) If, as a result of the procedures described in paragraph (i) of
this Section 4(d), any Potential Holder would be entitled or required to
purchase less than an Authorized Denomination of Series 1999-1 Notes, the
Auction Agent shall, in such manner as in its sole discretion it shall
determine, allocate Series 1999-1 Notes for purchase among Potential
Holders so that only Series 1999-1 Notes in Authorized Denominations are
purchased by any Potential Holder, even if such allocation results in one
or more of such Potential Holders not purchasing any Series 1999-1 Notes.
(e) Based on the result of each Auction, the Auction Agent shall determine
the aggregate principal amount of Series 1999-1 Notes to be purchased and the
aggregate principal amount of Series 1999-1 Notes to be sold by Potential
Holders and Existing Holders on whose behalf each Broker-Dealer submitted Bids
or Sell Orders and, with respect to each Broker-Dealer, to the extent that such
aggregate principal amount of Series 1999-1 Notes to be sold differs from such
aggregate principal amount of Series 1999-1 Notes to be purchased, determine to
which other Broker-Dealer or Broker-Dealers acting for one or more purchasers
such Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer shall receive,
as the case may be, Series 1999-1 Notes.
(f) Any calculation by the Auction Agent, the Corporation or the Trustee,
as applicable, of the Series 1999-1 Note Auction Rate, One-Month LIBOR,
Three-Month LIBOR, Maximum Auction Rate, All Hold Rate, Net Loan Rate and
Non-Payment Rate shall, in the absence of manifest error, be binding on all
other parties.
(g) Notwithstanding anything in this First Supplemental Indenture to the
contrary notwithstanding, no Auction will be held on any Auction Date hereunder
during the continuance of a Payment Default.
Section 5. Determination of Payment Defaults and Payment of Auction Agent
and Broker-Dealer Fees.
(a) The Trustee shall determine, not later than 2:00 p.m., New York City
time, on the Business Day next succeeding each Interest Payment Date relating to
a series of Series 1999- 1 Notes, whether a Payment Default has occurred with
respect to such series. If a Payment Default has occurred, the Trustee shall,
not later than 2:15 p.m., New York City time, on such Business Day, send a
notice thereof in substantially the form of Exhibit C attached hereto to the
Auction Agent by telecopy or similar means and, if such Payment Default is
cured, the Trustee
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shall immediately send a notice in substantially the form of Exhibit D attached
hereto to the Auction Agent by telecopy or similar means.
(b) Not later than 12:00 noon, New York City time, on each Interest Payment
Date relating to a series of Series 1999-1 Notes, the Corporation shall pay to
the Auction Agent, in immediately available funds out of amounts available
therefor in the Administration Fund, an amount equal to the Auction Agent Fee
and the Broker-Dealer Fee as calculated in accordance with the Auction Agent
Agreement. The Corporation shall, from time to time at the request of the
Auction Agent, reimburse the Auction Agent for its reasonable expenses as
provided in the Auction Agent Agreement, such expenses to be paid out of amounts
available therefor in the Administration Fund.
Section 6. Calculation of Maximum Auction Rate, All Hold Rate, Net Loan
Rate, One-Month LIBOR, Three-Month LIBOR and Non-Payment Rate. The Auction Agent
shall calculate the Maximum Auction Rate, the All Hold Rate and One-Month LIBOR
or Three-Month LIBOR, as the case may be, on each Auction Date and shall notify
the Trustee and the Broker-Dealers of the Maximum Auction Rate, the All Hold
Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, as provided
in the Auction Agent Agreement. If the ownership of the Series 1999-1 Notes is
no longer maintained in Book-Entry Form by the Securities Depository, the
Trustee shall calculate the Maximum Auction Rate on the Business Day immediately
preceding each Interest Payment Date after the delivery of definitive Series
1999-1 Notes pursuant to Section 17 hereof. If a Payment Default shall have
occurred, the Trustee shall calculate the Non-Payment Rate on the Interest Rate
Determination Date for (i) each Interest Period commencing after the occurrence
and during the continuance of such Payment Default and (ii) any Interest Period
commencing less than two Business Days after the cure of any Payment Default.
The Auction Agent shall determine One-Month LIBOR or Three- Month LIBOR, as
applicable, for each Interest Period other than the first Interest Period;
provided that if the ownership of the Series 1999-1 Notes is no longer
maintained in Book-Entry Form, or if a Payment Default has occurred, then the
Trustee shall determine One-Month LIBOR or Three-Month LIBOR, as applicable, for
each such Interest Period. The determination by the Trustee or the Auction
Agent, as the case may be, of One-Month LIBOR or Three-Month LIBOR, as
applicable, shall (in the absence of manifest error) be final and binding upon
all parties. If calculated or determined by the Auction Agent, the Auction Agent
shall promptly advise the Trustee of One-Month LIBOR or Three-Month LIBOR, as
applicable.
The Net Loan Rate with respect to each Interest Rate Determination Date
shall be determined by or on behalf of the Corporation and written notice
thereof given to the Auction Agent and the Trustee on or prior to the
twenty-fifth day (or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day) of the calendar month preceding such Interest Rate
Determination Date. If the Corporation shall fail or refuse to determine the Net
Loan Rate, the Net Loan Rate shall be the Net Loan Rate last determined and
communicated to the Auction Agent and the Trustee in accordance with this
paragraph. The determination by or on behalf of the Corporation of the Net Loan
Rate shall (in the absence of manifest error) be final and binding upon all
parties.
Section 7. Notification of Rates, Amounts and Payment Dates.
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(a) By 10:00 a.m., New York City time, on each Regular Record Date with
respect to the Series 1999-1 Notes, the Trustee shall determine the aggregate
amounts of interest distributable on the next succeeding Interest Payment Date
to the beneficial owners of each series thereof.
(b) As soon as practicable prior to each Interest Payment Date with respect
to the Series 1999-1 Notes, the Trustee shall:
(i) confirm with the Auction Agent, so long as no Payment Default has
occurred and is continuing and the ownership of each series of Series
1999-1 Notes is maintained in Book-Entry Form by the Securities Depository,
(1) the date of such next Interest Payment Date and (2) the amount payable
to the Auction Agent on such Interest Payment Date pursuant to Section 5(b)
hereof;
(ii) pursuant to Section 3 hereof, advise the Holders of each series
of Series 1999-1 Notes of any Carry-Over Amount accruing on such Series
1999-1 Notes; and
(iii) advise the Securities Depository, so long as the ownership of
each series of Series 1999-1 Notes is maintained in Book-Entry Form by the
Securities Depository, upon request, of the Series 1999-1 Note Interest
Rate payable on such series of Series 1999-1 Notes and the interest amount.
If any day scheduled to be an Interest Payment Date with respect to a
series of Series 1999-1 Notes shall be changed after the Trustee shall have
given the notice or confirmation referred to in clause (i) of the preceding
sentence, the Trustee shall, not later than 9:15 a.m., New York City time, on
the Business Day next preceding the earlier of the new Interest Payment Date or
the old Interest Payment Date, by such means as the Trustee deems practicable,
give notice of such change to the Auction Agent, so long as no Payment Default
has occurred and is continuing and the ownership of the Series 1999-1 Notes is
maintained in Book-Entry Form by the Securities Depository.
Section 8. Auction Agent.
(a) Bankers Trust Company is hereby appointed as Initial Auction Agent to
serve as agent for the Corporation in connection with Auctions. The Trustee and
the Corporation will, and the Trustee is hereby directed to, enter into the
Initial Auction Agent Agreement with Bankers Trust Company, as the Initial
Auction Agent. Any Substitute Auction Agent shall be (i) a bank, national
banking association or trust company duly organized under the laws of the United
States of America or any state or territory thereof having its principal place
of business in the Borough of Manhattan, New York, or such other location as
approved by the Trustee in writing and having a combined capital stock or
surplus of at least $50,000,000, or (ii) a member of the National Association of
Securities Dealers, Inc., having a capitalization of at least $50,000,000, and,
in either case, authorized by law to perform all the duties imposed upon it
hereunder and under the Auction Agent Agreement. The Auction Agent may at any
time resign and be discharged of the duties and obligations created by this
First Supplemental Indenture by giving at least ninety (90) days' notice to the
Trustee, the Market Agent and the Corporation.
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The Auction Agent may be removed at any time by the Trustee upon the written
direction of an Authorized Officer of the Corporation or the Holders of 66-2/3%
of the aggregate principal amount of the Series 1999-1 Senior Notes then
Outstanding (or, if no Series 1999-1 Senior Notes are then Outstanding, the
Holders of 66-2/3% of the aggregate principal amount of the Series 1999-1C Notes
then Outstanding)], and, if by such Holders, by an instrument signed by such
Holders or their attorneys and filed with the Auction Agent, the Corporation and
the Trustee upon at least ninety (90) days' notice. Neither resignation nor
removal of the Auction Agent pursuant to the preceding two sentences shall be
effective unless and until a Substitute Auction Agent has been appointed and has
accepted such appointment. However, if a successor Auction Agent shall not have
been appointed within sixty (60) days from the date of a notice of resignation,
the resigning Auction Agent may petition any court of competent jurisdiction for
the appointment of a successor Auction Agent. If required by the Corporation, a
Substitute Auction Agent Agreement shall be entered into with a Substitute
Auction Agent. Notwithstanding the foregoing, the Auction Agent may terminate
the Auction Agent Agreement if, within twenty-five (25) days after notifying the
Trustee, the Market Agent and the Corporation in writing that it has not
received payment of any Auction Agent Fee due it in accordance with the terms of
the Auction Agent Agreement, the Auction Agent does not receive such payment.
(b) If the Auction Agent shall resign or be removed or be dissolved, or if
the property or affairs of the Auction Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, the Trustee at the direction of an
Authorized Officer of the Corporation, shall use its best efforts to appoint a
Substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Corporation in connection
with Auctions. In the absence of bad faith, negligent failure to act or
negligence on its part, the Auction Agent shall not be liable for any action
taken, suffered or omitted or any error of judgment made by it in the
performance of its duties under the Auction Agent Agreement and shall not be
liable for any error of judgment made in good faith unless the Auction Agent
shall have been negligent in ascertaining (or failing to ascertain) the
pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate pursuant to
Section 6.4(b) of the Auction Agent Agreement, the Auction Agent shall give a
Notice of Fee Rate Change to the Trustee in accordance with the Auction Agent
Agreement.
Section 9. Broker-Dealers.
(a) The Auction Agent will enter into a Broker-Dealer Agreement with
Salomon Smith Barney Inc., as the sole initial Broker-Dealer with respect to the
Series 1999-1A Notes and Series 1999-1C Notes, and a Broker-Dealer Agreement
with Banc of America Securities LLC, as the sole initial Broker-Dealer with
respect to the Series 1999-1B Notes. An Authorized Officer of the Corporation
may, from time to time, approve one or more additional persons to serve as
Broker-Dealers under Broker-Dealer Agreements and shall be responsible for
providing such Broker-Dealer Agreements to the Trustee and the Auction Agent;
provided, however that (i) while Salomon Smith Barney Inc. is serving as a
Broker-Dealer with respect to the Series 1999- 1A Notes and Series 1999-1C
Notes, Salomon Smith Barney Inc. shall have the right to consent to the approval
of any additional Broker-Dealers with respect to the Series 1999-1A Notes and
Series 1999-1C Notes, which consent will not be unreasonably withheld, and (ii)
while Banc of America Securities LLC is serving as a Broker-Dealer with respect
to the Series 1999-1B Notes, Banc of America Securities LLC shall have the right
to consent
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to the approval of any additional Broker-Dealers with respect to the Series
1999-1B Notes, which consent will not be unreasonably withheld.
(b) Any Broker-Dealer may be removed at any time, at the request of an
Authorized Officer of the Corporation, but there shall, at all times, be at
least one Broker-Dealer appointed and acting as such.
Section 10. Changes in Auction Period or Periods.
(a) While any of the Series 1999-1 Notes are Outstanding, the Corporation
may, from time to time, convert the length of one or more Auction Periods (an
"Auction Period Adjustment"), in order to conform with then current market
practice with respect to similar securities or to accommodate economic and
financial factors that may affect or be relevant to the length of the Auction
Period and the Series 1999-1 Note Interest Rate borne by the Series 1999-1
Notes. The Corporation shall not initiate an Auction Period Adjustment unless it
shall have received, not less than three (3) days nor more than twenty (20) days
prior to the Auction Period Adjustment, (i) the written consent of the Market
Agent, which consent shall not be unreasonably withheld and (ii) written
confirmation from each of the Rating Agencies then rating the Series 1999-1
Notes that such Auction Period Adjustment will not adversely affect its ratings
then applicable to any of the Series 1999-1 Notes. The Corporation shall
initiate the Auction Period Adjustment by giving written notice by Corporation
Order to the Trustee, the Auction Agent, the Market Agent and the Securities
Depository in substantially the form of, or containing substantially the
information contained in, Exhibit E to this First Supplemental Indenture at
least ten (10) days prior to the Auction Date for such Auction Period.
(b) Any such adjusted Auction Period shall not be less than seven (7) days
nor more than ninety-one (91) days. If any such adjusted Auction Period will be
less than twenty- eight (28) days, the notice described above will be effective
only if it is accompanied by a written statement of the Trustee, the Auction
Agent and the Securities Depository to the effect that they are capable of
performing their duties, if any, under this First Supplemental Indenture, the
Auction Agent Agreement and any Broker-Dealer Agreement with respect to such
changed Auction Period.
(c) An Auction Period Adjustment shall take effect only (A) if the Trustee
and the Auction Agent receive, by 11:00 a.m., New York City time, on the
Business Day before the Auction Date for the first such Auction Period, a
Corporation Certificate in substantially the form attached as, or containing
substantially the same information contained in, Exhibit F to this First
Supplemental Indenture, authorizing the Auction Period Adjustment specified in
such certificate along with a copy of the consent of the Market Agent and the
Rating Agency confirmations described in subparagraph (a) above and, if
applicable, the written statement of the Trustee, the Auction Agent and the
Securities Depository described in subparagraph (b) above, and (B) Sufficient
Bids exist as of the Auction on the Auction Date for such first Auction Period.
If the
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condition referred to in (A) above is not met, the Series 1999-1 Note Interest
Rate for the next Auction Period shall be determined pursuant to the provisions
of Sections 4 through 9 hereof and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (A) is met but the condition referred in (B) above is not met,
the Series 1999-1 Note Auction Rate for the next Auction Period shall be the
lesser of the Maximum Auction Rate and the Net Loan Rate and the Auction Period
shall be the Auction Period determined without reference to the proposed change.
In connection with any Auction Period Adjustment, the Auction Agent shall
provide such further notice to such parties as is specified in Section 2.5 of
the Auction Agent Agreement.
Section 11. Changes in the Auction Date. The Market Agent, with the written
consent of an Authorized Officer of the Corporation, may specify an earlier
Auction Date (but in no event more than five Business Days earlier) than the
Auction Date that would otherwise be determined in accordance with the
definition of "Auction Date" in Section 1 of this First Supplemental Indenture
with respect to one or more specified Auction Periods in order to conform with
then current market practice with respect to similar securities or to
accommodate economic and financial factors that may affect or be relevant to the
day of the week constituting an Auction Date and the Series 1999-1 Note Interest
Rate borne by the Series 1999-1 Notes. The Market Agent shall deliver a written
request for consent to such change in the Auction Date to the Corporation not
less than three days nor more than twenty (20) days prior to the effective date
of such change. The Market Agent shall provide notice of its determination to
specify an earlier Auction Date for one or more Auction Periods by means of a
written notice delivered at least ten (10) days prior to the proposed changed
Auction Date to the Trustee, the Auction Agent, the Corporation and the
Securities Depository. Such notice shall be substantially in the form of, or
contain substantially the information contained in, Exhibit G to this First
Supplemental Indenture.
In connection with any change described in this Section 11, the Auction
Agent shall provide such further notice to such parties as is specified in
Section 2.5 of the Auction Agent Agreement.
Section 12. Additional Provisions Regarding the Series 1999-1 Note Interest
Rate. The determination of a Series 1999-1 Note Interest Rate by the Auction
Agent or any other Person pursuant to the provisions of the applicable Section
of this First Supplemental Indenture shall be conclusive and binding on the
Holders of the series of Series 1999-1 Notes to which such Series 1999-1 Note
Interest Rate applies, and the Corporation and the Trustee may rely thereon for
all purposes.
In no event shall the cumulative amount of interest paid or payable on a
series of Series 1999-1 Notes (including interest calculated as provided herein,
plus any other amounts that constitute interest on the Series 1999-1 Notes of
such series under applicable law, which are contracted for, charged, reserved,
taken or received pursuant to the Series 1999-1 Notes of such series or related
documents) calculated from the date of issuance of such series through any
subsequent day during the term of such series or otherwise prior to payment in
full of the Series
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1999-1 Notes of such series exceed the amount permitted by applicable law. If
the applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Series 1999-1 Notes of a series or related documents
or otherwise contracted for, charged, reserved, taken or received in connection
with the Series 1999-1 Notes of such series, or if the redemption or
acceleration of the maturity of the Series 1999-1 Notes of such series results
in payment to or receipt by the Holder or any former Holder of the Series 1999-1
Notes of such series of any interest in excess of that permitted by applicable
law, then, notwithstanding any provision of the Series 1999-1 Notes of such
series or related documents to the contrary, all excess amounts theretofore paid
or received with respect to the Series 1999-1 Notes of such series shall be
credited on the principal balance of the Series 1999-1 Notes of such series (or,
if the Series 1999-1 Notes of such series have been paid or would thereby be
paid in full, refunded by the recipient thereof), and the provisions of the
Series 1999-1 Notes of such series and related documents shall automatically and
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for under the Series 1999-1
Notes of such series and under the related documents.
Section 13. Qualifications of Market Agent. The Market Agent shall be a
member of the National Association of Securities Dealers, Inc., have a
capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by this First Supplemental Indenture. The Market
Agent may resign and be discharged of the duties and obligations created by this
First Supplemental Indenture by giving at least thirty (30) days notice to the
Corporation and the Trustee, provided that such resignation shall not be
effective until the appointment of a successor market agent by the Corporation
and the acceptance of such appointment by such successor market agent. The
Market Agent may be replaced at the direction of the Corporation, by an
instrument signed by an Authorized Officer of the Corporation filed with the
Market Agent and the Trustee at least thirty (30) days before the effective date
of such replacement, provided that such replacement shall not be effective until
the appointment of a successor market agent by the Corporation and the
acceptance of such appointment by such successor market agent.
In the event that the Market Agent shall be removed or be dissolved, or if
the property or affairs of the Market Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and there is no Market Agent, and the
Corporation shall not have appointed its successor as Market Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section 13, shall
be deemed to be the Market Agent for all purposes of this First Supplemental
Indenture until the appointment by the Corporation of the successor Market
Agent. Nothing in this Section 13 shall be construed as conferring on the
Trustee additional duties other than as set forth herein.
Section 14. Purposes of Issuance of Series 1999-1 Notes. The Series 1999-1
Notes are being issued to provide funds to be used to (a) acquire student loan
notes incurred under the Higher Education Act and under the Alternative Loan
Programs, (b) fund the Reserve Fund, (c) pay a portion of the interest coming
due on the Series 1999-1 Notes and (d) pay Costs of Issuance of the Series
1999-1 Notes.
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Section 15. Deposit of Series 1999-1 Note Proceeds. From the proceeds
derived from the sale of the Series 1999-1 Notes, there shall be deposited with
the Trustee:
(1) for credit to the Series 1999-1 Reserve Account, an amount equal
to $1,894,500; and
(2) for credit to the Series 1999-1 Capitalized Interest Account, an
amount equal to $4,700,000;
(3) for credit to the Series 1999-1 Cost of Issuance Account, an
amount equal to $641,754;
(4) for credit to the Series 1999-1 Acquisition Account, the
remainder, to remain in the Series 1999-1 Acquisition Account until applied
for the acquisition or origination of Eligible Loans, including the
acquisition of Eligible Loans pursuant to the Series 1999-1 Transfer
Agreement (which Eligible Loans were either originated by GOAL Funding or
purchased by GOAL Funding pursuant to the Student Loan Purchase Agreements
identified in Exhibit H-2 hereto) and pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-1 hereto (as such Exhibit H-1 may be
amended or supplemented from time to time).
Upon the acquisition of Eligible Loans pursuant to the Series 1999-1
Transfer Agreement, the Trustee shall deposit to the credit of the Series 1999-1
Alternative Loan Guarantee Account cash in the amount of $1,027,937.56 received
from the trustee for GOAL Funding in connection with such acquisition.
Thereafter, upon the acquisition of any Alternative Loan with amounts from the
Series 1999-1 Acquisition Account or the Series 1999-1 Surplus Account, the
Trustee shall, as a condition of such acquisition, receive and deposit to the
credit of the Series 1999-1 Alternative Loan Guarantee Account cash in the
amount of the origination fee, if any, paid in connection with the origination
of such Alternative Loan.
Section 16. Redemption of Series 1999-1 Notes. The Series 1999-1 Notes are
subject to redemption as provided in this Section 16.
(A) Redemption From Unexpended Proceeds. Subject to compliance with Section
10.2 of the Indenture, Outstanding Series 1999-1 Notes shall be redeemed, in
part, on the first regularly scheduled Interest Payment Date occurring after
April 4, 2000, for which notice can be given in accordance with subsection (E)
of this Section 16, at a Redemption Price equal to 100% of the principal amount
of Series 1999-1 Notes so redeemed, from proceeds of the Series 1999-1 Notes
constituting that portion of the Balance of the Series 1999-1 Acquisition
Account that have not been used to acquire Eligible Loans by April 4, 2000, and
from that portion of the Reserve Fund which, if left in the Reserve Fund upon
such redemption, would cause the Balance in the Reserve Fund to exceed the
Reserve Fund Requirement, calculated after giving effect to such redemption. The
Trustee shall transfer any such moneys to the credit of the Series 1999-1
Retirement Subaccount for such purpose without any further authorization or
direction.
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(B) Redemption from Surplus Account. Subject to compliance with Section
10.2 of the Indenture, Outstanding Series 1999-1 Notes shall be redeemed on any
regularly scheduled Interest Payment Date with respect thereto, in whole or in
part, at a Redemption Price equal to 100% of the principal amount thereof to be
redeemed, from that portion of the Balance of the Series 1999-1 Surplus
Subaccount transferred to the Series 1999-1 Retirement Account in accordance
with this subsection (B). If there any amounts in the Series 1999-1 Surplus
Subaccount which have been on deposit therein for at least twelve (12) months
and have not been used to acquire Student Loans, and if there are no
deficiencies in any of the Indemnification Fund, the Note Fund, the Reserve Fund
or the Special Redemption and Prepayment Account, the Trustee shall give written
notice to the Corporation that such moneys will be transferred to the Series
1999-1 Retirement Account and applied to the redemption of Series 1999-1 Notes
in accordance with this subsection (B) unless the Corporation, within ten (10)
Business Days of receipt of such notice, delivers to the Trustee a Corporation
Certificate to the effect that some or all of such amounts are reasonably
expected to be necessary to pay Debt Service on the Outstanding Notes or on
Outstanding Other Obligations, Carry-Over Amounts, including accrued interest
thereon, with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make required deposits to the Indemnification Fund. Any amounts so
certified by the Corporation will remain in the Series 1999-1 Surplus Subaccount
and will not be applied to the redemption of Series 1999-1 Notes pursuant to
this subsection (B).
(C) Optional Redemption. Subject to compliance with Section 10.2 of the
Indenture, Outstanding Series 1999-1 Notes may, at the option of the Corporation
and from amounts credited to the Retirement Account for such purpose, be
redeemed on any regularly scheduled Interest Payment Date with respect thereto,
in whole or in part, at a Redemption Price equal to 100% of the principal amount
of Series 1999-1 Notes to be so redeemed.
Notwithstanding the foregoing, no Series 1999-1 Notes shall be redeemed
pursuant to this subsection (C) unless the Trustee receives, at least forty-five
(45) days prior to the proposed Redemption Date (unless a shorter notice is
satisfactory to the Trustee), a Corporation Certificate certifying that, based
on a Cash Flow Projection, such redemption of such Series 1999-1 Notes will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the
Indemnification Fund.
(D) Selection of Series 1999-1 Notes for Redemption. If less than all
Outstanding Series 1999-1 Notes are to be redeemed pursuant to subsections (A),
(B) or (C) of this Section 16, the principal amounts of each series of Series
1999-1 Notes to be redeemed shall be selected as follows: to the extent that the
provisions of Section 10.2 of the Indenture will not be violated thereby, either
(i) that principal amount of Series 1999-1C Notes shall be redeemed which bears,
as nearly as practicable, the same (but no greater) proportion to the aggregate
principal amount of all Outstanding Series 1999-1 Notes to be redeemed as the
aggregate principal amount of Outstanding Series 1999-1C Notes bears to the
aggregate principal amount of all Outstanding Series 1999-1 Notes or (ii) if the
Trustee receives, at least forty-five (45) days prior to the Redemption Date
(unless a shorter notice is satisfactory to the Trustee), a Corporation
Certificate certifying that, based on a Cash Flow Projection, a different
proportion of
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Series 1999-1C Notes to be redeemed will not materially adversely
affect the Corporation's ability to pay Debt Service on the Outstanding Notes
and on Outstanding Other Obligations, Carry-Over Amounts (including accrued
interest thereon) with respect to Outstanding Notes, Administrative Expenses or
Note Fees or to make required deposits to the Indemnification Fund, Series
1999-1C Notes shall be redeemed in such principal amount as is designated by the
Corporation in such certificate. The remaining Series 1999-1 Notes to be
redeemed shall be selected from each series of the Series 1999-1 Senior Notes
in, as nearly as practicable, the same proportion to the aggregate principal
amount of all Outstanding Series 1999-1 Senior Notes to be redeemed as the
aggregate principal amount of Outstanding Series 1999-1 Senior Notes of such
series bears to the aggregate principal amount of all Outstanding Series 1999-1
Senior Notes.
Notwithstanding the foregoing provisions of this Section 16, to the extent
Series 1999-1C Notes cannot be redeemed due to the application of Section 10.2
of the Indenture, but Series 1999-1 Senior Notes may be redeemed without
violating the provisions of said Section 10.2, the particular Series 1999-1
Notes to be redeemed shall be selected from the Series 1999-1 Senior Notes in
the manner described in the preceding paragraph.
If less than all of the Outstanding Series 1999-1 Notes of a given series
are to be redeemed pursuant to this Section 16, the particular Series 1999-1
Notes to be redeemed shall be selected by the Trustee by lot in such manner as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal of Series 1999-1 Notes in
an Authorized Denomination.
The Trustee shall promptly notify the Note Registrar and any Paying Agent
for the Series 1999-1 Notes (in each case, if other than the Trustee) in writing
of the Series 1999-1 Notes selected for redemption and, in the case of any
Series 1999-1 Note selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of the Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Series 1999-1 Notes shall relate,
in the case of any Series 1999-1 Note redeemed or to be redeemed only in part,
to the portion of the principal of such Series 1999-1 Note which has been or is
to be redeemed.
(E) Notice of Redemption. Notice of redemption of Series 1999-1 Notes
pursuant to this Section 16 shall be given not less than fifteen (15) days prior
to the Redemption Date in accordance with the provisions of Section 10.4 of the
Indenture.
Section 17. Book-Entry Series 1999-1 Notes. (a) The registered Holder of
all Series 1999-1 Notes shall be the Securities Depository and the Series 1999-1
Notes shall be registered in the name of the nominee for the Securities
Depository. The "Series 1999-1 Notes" referred to in this subsection (a) shall
refer to the Series 1999-1 Notes registered in the name of the Securities
Depository.
(b) The Series 1999-1 Notes shall be initially issued in the form of
separate, single, authenticated fully-registered Series 1999-1 Notes for each
series thereof in the amount of such series. Upon initial issuance, the
ownership of each such Series 1999-1 Note shall be
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registered in the registration books kept by the Note Registrar in the name of
the nominee of the Securities Depository. The Trustee and the Corporation may
treat the Securities Depository (or its nominee) as the sole and exclusive owner
of the Series 1999-1 Notes registered in its name for the purposes of (1)
payment of the principal or Redemption Price of, interest on or Carry-Over
Amount (including any accrued interest thereon) with respect to the Series
1999-1 Notes, (2) selecting the Series 1999-1 Notes or portions thereof to be
redeemed, (3) giving any notice permitted or required to be given to Holders
under the Indenture, (4) registering the transfer of Series 1999-1 Notes, and
(5) obtaining any consent or other action to be taken by Holders and for all
other purposes whatsoever, and neither the Trustee nor the Corporation shall be
affected by any notice to the contrary (except as provided in subsection (c)
below). Neither the Trustee nor the Corporation shall have any responsibility or
obligation to any Participant, any Beneficial Owner or any other Person claiming
a beneficial ownership interest in the Series 1999-1 Notes under or through the
Securities Depository or any Participant, or any other Person which is not shown
on the registration books of the Note Registrar as being a Holder, with respect
to the accuracy of any records maintained by the Securities Depository or any
Participant, the payment to the Securities Depository of any amount in respect
of the principal or Redemption Price of, interest on or Carry-Over Amount
(including any accrued interest thereon) with respect to the Series 1999-1
Notes; any notice which is permitted or required to be given to Holders under
the Indenture; the selection by the Securities Depository or any Participant of
any Person to receive payment in the event of a partial redemption of the Series
1999-1 Notes; or any consent given or other action taken by the Securities
Depository as Holder. The Trustee shall pay all principal and Redemption Price
of, interest on and Carry-Over Amount (including any accrued interest thereon)
with respect to the Series 1999-1 Notes only "to or upon the order of" the
Securities Depository (as that phrase is used in the Uniform Commercial Code as
adopted in the State of South Dakota), and all such payments shall be valid and
effective to fully satisfy and discharge the Corporation's obligations with
respect to the principal, purchase price or Redemption Price of, interest on and
Carry-Over Amount (including any accrued interest thereon) with respect to the
Series 1999-1 Notes to the extent of the sum or sums so paid. Except as provided
in subsection(c) below, no Person other than the Securities Depository shall
receive an authenticated Series 1999-1 Note evidencing the obligation of the
Corporation to make payments of principal or Redemption Price, interest and
Carry-Over Amount (including any accrued interest thereon) pursuant to this
Indenture. Upon delivery by the Securities Depository to the Trustee of written
notice to the effect that the Securities Depository has determined to substitute
a new nominee in place of the preceding nominee, the Series 1999-1 Notes will be
transferable to such new nominee in accordance with subsection (f) below.
(c) Except with respect to any Series 1999-1 Notes during such time as they
bear interest at the Auction Rate, in the event the Corporation determines that
it is in the best interest of the Corporation not to continue the book-entry
system of transfer or that the interest of the Holders might be adversely
affected if the book-entry system of transfer is continued, the Corporation may
so notify the Securities Depository and the Trustee, whereupon the Securities
Depository will notify the Participants of the availability through the
Securities Depository of definitive Series 1999-1 Notes. In such event, the
Trustee shall authenticate, transfer and exchange definitive Series 1999-1 Notes
as requested by the Securities Depository in appropriate amounts in accordance
with subsection (f) below. The Securities Depository may determine to
discontinue providing its services with respect to the Series 1999-1 Notes at
any time by giving
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notice to the Corporation and the Trustee and discharging its responsibilities
with respect thereto under applicable law, or the Corporation may determine that
the Securities Depository is incapable of discharging its responsibilities and
may so advise the Securities Depository. In either such event, the Corporation
shall either establish its own book-entry system or use reasonable efforts to
locate another securities depository. Under such circumstances (if there is no
successor Securities Depository), the Corporation and the Trustee shall be
obligated to deliver definitive Series 1999-1 Notes as described in this
Indenture and in accordance with subsection (f) below. In the event definitive
Series 1999-1 Notes are issued, the provisions of this Indenture shall apply to
such definitive Series 1999-1 Notes in all respects, including, among other
things, the transfer and exchange of such Series 1999-1 Notes and the method of
payment of principal or Redemption Price of, interest on and Carry-Over Amount
(including any accrued interest thereon) with respect to such Series 1999-1
Notes. Whenever the Securities Depository requests the Corporation and the
Trustee to do so, the Trustee and the Corporation will cooperate with the
Securities Depository in taking appropriate action after reasonable notice (A)
to make available one or more separate definitive Series 1999-1 Notes to any
Participant having Series 1999-1 Notes credited to its account with the
Securities Depository or (B) to arrange for another securities depository to
maintain custody of definitive Series 1999-1 Notes.
(d) Notwithstanding any other provision of the Indenture to the contrary,
so long as any Series 1999-1 Note is registered in the name of the nominee of
the Securities Depository, all payments with respect to the principal or
Redemption Price of, interest on and Carry-Over Amount (including any accrued
interest thereon) with respect to such Series 1999-1 Note and all notices with
respect to such Series 1999-1 Note shall be made and given, respectively, to the
Securities Depository as provided in its letter of representations.
(e) In connection with any notice or other communication to be provided to
Holders pursuant to the Indenture by the Corporation or the Trustee or with
respect to any consent or other action to be taken by Holders, the Corporation
or the Trustee, as the case may be, shall establish a record date for such
consent or other action and give the Securities Depository notice of such record
date not less than fifteen (15) calendar days in advance of such record date to
the extent possible. Such notice to the Securities Depository shall be given
only when the Securities Depository is the sole Holder.
(f) In the event that any transfer or exchange of Series 1999-1 Notes is
permitted under subsection (b) or (c) of this Section 17, such transfer or
exchange shall be accomplished upon receipt by the Trustee from the registered
Holder thereof of the Series 1999-1 Notes to be transferred or exchanged and
appropriate instruments of transfer to the permitted transferee, all in
accordance with the applicable provisions of the Indenture. In the event
definitive Series 1999-1 Notes are issued to Holders other than the nominee of
the Securities Depository, or another securities depository as Holder of all the
Series 1999-1 Notes, the provisions of the Indenture shall also apply to, among
other things, the printing of such definitive Series 1999-1 Notes and the
methods of payment of principal or Redemption Price of, interest on and
Carry-Over Amount (including any accrued interest thereon) with respect to such
Series 1999-1 Notes.
(g) Notwithstanding any provision of Article Ten of the Indenture to the
contrary, in connection with any redemption of Series 1999-1 Notes while The
Depository Trust Company,
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New York, New York ("DTC"), is the sole Holder, the Corporation shall give
notice of such redemption to the Trustee at least thirty (30) days prior to the
date fixed for redemption with respect to the Series 1999-1 Notes, and the
Trustee shall give notice of redemption to DTC as Holder of such Series 1999-1
Notes pursuant to Section 10.4 of the Indenture at least fifteen (15) days and
not more than thirty (30) days prior to the date fixed for redemption of Series
1999-1 Notes.
Section 18. Series 1999-1 Accounts and Subaccounts. So long as any Series
1999-1 Notes are Outstanding, the following Accounts and Subaccounts, which are
hereby established, shall be maintained by the Trustee or the Deposit Agent, as
the case may be:
In the Acquisition Fund, an Account to be known as the "Series 1999-1
Acquisition Account" and an Account to be known as the "Series 1999-1
Capitalized Interest Account"; in the Administration Fund, an Account to be
known as the "Series 1999-1 Administration Account"and an Account to be known as
the "Series 1999-1 Cost of Issuance Account"; in the Reserve Fund, an Account to
be known as the "Series 1999-1 Reserve Account"; in the Interest Account, a
Subaccount to be known as the "Series 1999-1 Interest Subaccount"; in the
Principal Account, a Subaccount to be known as the "Series 1999-1 Principal
Subaccount"; in the Retirement Account, a Subaccount to be known as the "Series
1999-1 Retirement Subaccount"; in the Alternative Loan Guarantee Fund, an
Account to be known as the "Series 1999-1 Alternative Loan Guarantee Account";
and in the Surplus Account, a Subaccount to be known as the "Series 1999-1
Surplus Subaccount."
All amounts transferred to the Acquisition Fund, the Administration Fund,
the Reserve Fund, the Interest Account, the Principal Account, the Retirement
Account, the Alternative Loan Guarantee Fund and the Surplus Account from any
other Fund or Account pursuant to the requirements of the Indenture with respect
to the Series 1999-1 Notes or the Student Loans Financed with the proceeds
thereof shall be deposited to the credit of the Series 1999-1 Acquisition
Account, the Series 1999-1 Administration Account, the Series 1999-1 Reserve
Account, the Series 1999-1 Interest Subaccount, the Series 1999-1 Principal
Subaccount, the Series 1999-1 Retirement Subaccount, the Series 1999-1
Alternative Loan Guarantee Account or the Series 1999-1 Surplus Subaccount,
respectively, and as appropriate.
Except as heretofore provided in this Section 18, nothing herein shall be
deemed to prohibit (1) the Trustee from using Balances of any Account or
Subaccount established by this Section 18 to remedy deficiencies for which
Balances of the Fund or Account in which such Account or Subaccount is
established are subject to use under the Indenture, or (2) the application of
Balances of any Account or Subaccount established by this Section 18 for any
purpose for which Balances of the Fund or Account in which such Account or
Subaccount is established are authorized to be applied by the Indenture.
When there shall be no Series 1999-1 Notes Outstanding, the Series 1999-1
Acquisition Account and the Series 1999-1 Capitalized Interest Account shall
each terminate and any Balance thereof at such time shall be used as other
Balances of the Acquisition Fund, and the Series 1999-1 Administration Account
and the Series 1999-1 Cost of Issuance Account shall each terminate and any
Balance thereof at such time shall be used as other Balances of the
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Administration Fund. When there shall be no Series 1999-1 Notes Outstanding, the
Series 1999-1 Interest Account shall terminate and any Balance thereof at such
time shall be used as other Balances of the Interest Account, the Series 1999-1
Principal Account shall terminate and any Balance thereof at such time shall be
used as other Balances of the Principal Account, the Series 1999-1 Retirement
Account shall terminate and any Balance thereof at such time shall be used as
other Balances of the Retirement Account, the Series 1999-1 Reserve Account
shall terminate and any Balance thereof at such time shall be used as other
Balances of the Reserve Fund, the Series 1999-1 Alternative Loan Guarantee
Account shall terminate and any Balance thereof at such time shall be used as
other Balances of the Reserve Fund and the Series 1999-1 Surplus Subaccount
shall terminate and any Balance thereof at such time shall be used as other
Balances of the Surplus Account.
Section 19. Series 1999-1 Capitalized Interest Account. A deposit shall be
made to the credit of the Series 1999-1 Capitalized Interest Account pursuant to
Section 15 of this First Supplemental Indenture. Notwithstanding the provisions
of Section 4.2 of the Indenture, amounts in the Series 1999-1 Capitalized
Interest Account shall be transferred to the Series 1999-1 Interest Subaccount
on any Monthly Payment Date to the extent necessary to remedy any deficiency
therein after any required transfers thereto from the Revenue Fund and the
Series 1999-1 Surplus Subaccount. The Corporation may, at any time prior to
April 5, 2000, by Corporation Order, direct that all or a portion of the Balance
in the Series 1999-1 Capitalized Interest Account be transferred to the Series
1999-1 Acquisition Subaccount and thereafter applied in the same manner as those
amounts originally deposited to the credit of the Series 1999-1 Acquisition
Subaccount pursuant to Section 15 of this First Supplemental Indenture, provided
that the Corporation has certified in such Corporation Order that, based on a
Cash Flow Projection, any such amount is not reasonably expected to be needed to
remedy a deficiency in the Series 1999-1 Interest Subaccount as described above.
Any amounts remaining in the Series 1999-1 Capitalized Interest Account as of
December 1, 2002, shall be transferred by the Trustee to the Series 1999-1
Retirement Account and thereafter applied to the redemption of Series 1999-1
Notes pursuant to Section 16(C) hereof.
Section 20. Purchase or Origination of Eligible Loans From Series 1999-1
Acquisition Account and Series 1999-1 Surplus Subaccount. The price paid to
purchase an Eligible Loan from the Balances in the Series 1999-1 Acquisition
Account (other than the Eligible Loans to be purchased pursuant to the Series
1999-1 Transfer Agreement, the purchase price for which is set forth in such
agreement) or the Series 1999-1 Surplus Subaccount shall not exceed 100% of the
remaining unpaid principal amount of such Eligible Loan, plus accrued Special
Allowance Payments and noncapitalized borrower interest thereon, if any, to the
date of purchase, reasonable transfer, origination and assignment fees, if
applicable, and, in the case of FFELP Loans only, a premium which would not
cause the weighted average of the premiums paid on all FFELP Loans Financed from
the Series 1999-1 Acquisition Account and the Series 1999-1 Surplus Subaccount
to exceed 1.75% (or such greater premium the payment of which will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes, Other Indenture Obligations, Carry-Over Amounts (including
accrued interest thereon) with respect to Outstanding Notes, Administrative
Expenses or Note Fees or to make required transfers to the Indemnification Fund,
as shown in a subsequent Cash Flow Projection received by the Trustee, and which
will not result in the reduction or withdrawal of the outstanding rating
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assigned by any Rating Agency to the Series 1999-1 Notes, as evidenced in
writing to the Trustee by each such Rating Agency), and as otherwise authorized
by Section 4.2 of the Indenture.
After the purchase of Eligible Loans pursuant to the Series 1999-1 Transfer
Agreement, any remaining amounts in the Series 1999-1 Acquisition Account shall
be applied to the purchase or origination of Eligible Loans in accordance with
the following restrictions:
(1) No more than $10,000,000 aggregate Principal Balance of
Alternative Loans may be so purchased or originated, of which no more than
(a) $5,500,000 may be "credit ready" Alternative Loans, (b) $250,000 may be
Alternative Loans made with respect to students attending schools of less
than four (4) years, and (c) $250,000 will have been originated under the
Great Opportunities Academic Loan II Program offered by U.S. Bank National
Association or the Pathway Loan Program offered by Marquette Bank, N.A.;
(2) No more than $5,000,000 aggregate Principal Balance of
Consolidation Loans may be so purchased or originated; and
(3) All FFELP Loans so purchased must be from Lenders located in
states in the midwestern portion of the United States;
provided that the foregoing restrictions may be exceeded if action will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes, Other Indenture Obligations, Carry-Over Amounts (including
accrued interest thereon) with respect to Outstanding Notes, Administrative
Expenses or Note Fees or to make required transfers to the Indemnification Fund,
as shown in a subsequent Cash Flow Projection received by the Trustee, and which
will not result in the reduction or withdrawal of the outstanding rating
assigned by any Rating Agency to the Series 1999-1 Notes, as evidenced in
writing to the Trustee by each such Rating Agency.
The Corporation shall not purchase or originate any Financed Student Loans
which are subject to any interest rate reduction or other program that would
reduce the yield thereon (I) if such yield reduction (a) is more than 2.0% per
annum, (b) may commence if any of the first forty-eight (48) consecutive
payments have not been received in a timely fashion or (c) may continue if any
payments are not received in a timely fashion, or (II)(a) from Balances in the
Series 1999-1 Acquisition Account if, as a result of such purchase or
origination, the aggregate of the amounts applied from such Balances to the
purchase or origination of Student Loans subject to such programs would exceed
$52,000,000, or (b) from Balances in the Series 1999-1 Surplus Subaccount if, as
a result of such purchase or origination, the aggregate of the amounts applied
from such Balances to the purchase or origination of Student Loans subject to
such programs would exceed 50% of the aggregate of the amounts applied from such
Balances to the purchase or origination of all Student Loans, unless the
Corporation delivers to the Trustee (i) a Corporation Certificate certifying
that, based on a Cash Flow Projection, the purchase or origination of such
Student Loan will not materially adversely affect the Corporation's ability to
pay Debt Service on the Outstanding Notes and on Outstanding Other Obligations,
to pay Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes or to make
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required deposits to the Indemnification Fund, and (ii) written confirmation
from each Rating Agency then rating the Series 1999-1 Notes that the purchase or
origination of such Student Loan will not result in a reduction or withdrawal of
the rating of the Series 1999-1 Notes; provided that the foregoing restrictions
shall not apply to the purchase or origination of any Student Loan subject to a
yield reduction program which the Corporation may, at its option, discontinue at
any time and which would not reduce the yield thereon by more than .25% per
annum.
The Corporation shall not agree to, or permit any Servicer to agree to, any
discount or other reduction in the yield on any Student Loan Financed from
Balances in the Series 1999-1 Acquisition Account or the Series 1999-1 Surplus
Subaccount (other than any such reduction that existed at the time such Student
Loan was so Financed) if, as a result thereof, the yield on such Student Loan
would be reduced by more than .25% per annum, unless the Corporation delivers to
the Trustee (1) a Corporation Certificate certifying that, based on a Cash Flow
Projection, such reduction will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and on
Outstanding Other Obligations, to pay Carry-Over Amounts (including accrued
interest thereon) with respect to Outstanding Notes or to make required deposits
to the Indemnification Fund, and (2) written confirmation from each Rating
Agency then rating the Series 1999-1 Notes that such reduction will not result
in a reduction or withdrawal of the rating of the Series 1999-1 Notes.
The Corporation shall not purchase or originate any Student Loan from the
Balance in the Series 1999-1 Surplus Subaccount (A) after December 31, 2001, or
(B) if such Student Loan is an Alternative Loan, unless the Corporation delivers
to the Trustee (1) a Corporation Certificate certifying that, based on a Cash
Flow Projection, the purchase or origination of such Student Loan will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes and on Outstanding Other Obligations, to pay Carry-Over
Amounts (including accrued interest thereon) with respect to Outstanding Notes
or to make required deposits to the Indemnification Fund, and (2) written
confirmation from each Rating Agency then rating the Series 1999-1 Notes that
the purchase or origination of such Student Loan will not result in a reduction
or withdrawal of the rating of the Series 1999-1 Notes.
The Corporation shall not purchase or originate any FFELP Loan from the
Balances in the Series 1999-1 Acquisition Account or the Series 1999-1 Surplus
Subaccount if, as a result of an amendment to the Higher Education Act after the
date of this First Supplemental Indenture (other than an amendment contained in
a bill currently pending in, or passed by, Congress and subsequently enacted
into law), such FFELP Loan bears a rate of interest that is materially lower
(.25% per annum or more) than the rate of interest such FFELP Loan would have
borne under the Higher Education Act as it currently exists, unless the
Corporation delivers to the Trustee (1) a Corporation Certificate certifying
that, based on a Cash Flow Projection, the purchase or origination of such FFELP
Loan will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes and on Outstanding Other Obligations, to pay
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes or to make required deposits to the Indemnification Fund, and
(2) written confirmation from each Rating Agency then rating the Series 1999-1
Notes that the purchase or origination of such FFELP Loan will not result in a
reduction or withdrawal of the rating of the Series 1999-1 Notes.
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<PAGE>
Any Student Loans Financed from Balances in the Series 1999-1 Surplus
Subaccount prior to April 4, 2000, and constituting Eligible Loans shall, upon
the financing thereof, be credited to, and included in the Balance of, the
Series 1999-1 Acquisition Account, and shall not be deemed to have been Financed
with moneys in the Surplus Account but to have been Financed with moneys in the
Acquisition Fund.
Section 21. Limitation on Costs of Issuance, Administrative Expenses and
Note Fees. The Corporation covenants and agrees that the Costs of Issuance,
Administrative Expenses and Note Fees to be paid, or reimbursed to the
Corporation, from the Administration Fund shall not exceed the aggregate amount
thereof specified in the Closing Cash Flow Projection, unless the Corporation
delivers to the Trustee (i) a Corporation Certificate certifying that, based on
a Cash Flow Projection, the payment or reimbursement of a greater amount of
Costs of Issuance, Administrative Expenses and Note Fees from the Administration
Fund will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes and on Outstanding Other Obligations, to pay
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes or to make required deposits to the Indemnification Fund and
(ii) written confirmation from each of the Rating Agencies then rating the
Series 1999-1 Notes to the effect that payment or reimbursement of such
additional Costs of Issuance, Administrative Expenses or Note Fees will not
result in a reduction or withdrawal of the rating of the Series 1999-1 Notes.
Section 22. Proceeds of Sales of Certain Student Loans To Be Deposited in
the Acquisition Fund. The Trustee shall deposit in the Acquisition Fund the
proceeds of the resale to a Lender of any Student Loans Financed with proceeds
of the Series 1999-1 Notes pursuant to such Lender's repurchase obligation under
the applicable Student Loan Purchase Agreement upon receipt thereof from the
Corporation, to the extent directed in a Corporation Order and received by the
Trustee prior to April 4, 2000. Any such proceeds received by the Trustee after
such date shall be deposited in the Revenue Fund.
Section 23. Certain Findings, Determinations and Designations. The
Corporation hereby finds and determines as follows:
(A) The Original Indenture has not been amended, supplemented or
repealed since the execution thereof. This First Supplemental Indenture
supplements the Indenture, constitutes and is a "Supplemental Indenture"
within the meaning of such term as defined and used in the Indenture and is
executed under and pursuant to the Indenture.
(B) No Notes have heretofore been issued under the Indenture. The
Series 1999-1A Notes and the Series 1999-1B Notes constitute, and are
hereby designated as, "Class A Notes" within the meaning of the term as
defined and used in the Indenture, and the Series 1999-1C Notes constitute,
and are hereby designated as, "Class B Notes" within the meaning of the
term as defined and used in the Indenture.
(C) Upon receipt of the proceeds of the sale of the Series 1999-1
Notes: (1) the revenues and other moneys and property pledged under the
Indenture will not be encumbered by any lien or charge thereon or pledge
thereof, other than the lien and
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<PAGE>
charge thereon and pledge thereof created by the Indenture for the payment
and security of the Notes; and (2) there will not be outstanding any bonds,
notes or other evidences of indebtedness payable from and secured by a lien
on or pledge or charge upon the revenues and other moneys and property
pledged under the Indenture other than the Series 1999-1 Notes.
(D) There does not exist an "Event of Default," within the meaning of
such term as defined in the Indenture, which is continuing, nor does there
exist any condition which, after the passage of time, would constitute such
an "Event of Default."
Section 24. Governing Law. This First Supplemental Indenture shall be
governed by and be construed in accordance with the laws of the State without
giving effect to the conflicts-of-laws principles thereof; provided that those
provisions of this First Supplemental Indenture relating to the rights and
duties of the Auction Agent shall be governed by and be construed in accordance
with the laws of the State of New York.
Section 25. Section Headings; Table of Contents. The headings or titles of
the several sections hereof shall be solely for convenience of reference and
shall not affect the meaning or construction, interpretation or effect of this
First Supplemental Indenture.
Section 26. Severability. If any provision of this First Supplemental
Indenture shall be held or deemed to be or shall, in fact, be inoperative or
unenforceable as applied in any particular case in any jurisdiction or
jurisdictions or in all jurisdictions or in all cases because it conflicts with
any provisions of any constitution or statute or rule of public policy, or for
any other reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or paragraphs
in this First Supplemental Indenture contained shall not affect the remaining
portions of this First Supplemental Indenture or part thereof.
Section 27. Counterparts. This First Supplemental Indenture may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 28. Effect of First Supplemental Indenture. Upon the execution and
delivery of this First Supplemental Indenture, the Indenture shall be amended
and supplemented in accordance herewith, and this First Supplemental Indenture
shall form a part of the Indenture for all purposes and every Holder of Notes
hereafter authenticated and delivered and Other Beneficiary under the Indenture
shall be bound hereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed all as of the day and year first above written.
EDUCATION LOANS INCORPORATED
By /s/ A. Norgrin Sanderson
------------------------------------
President
Attest:
/s/ Manly Feinstein
- ---------------------------------
Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Gloria Kessler
------------------------------------
Assistant Vice President
Attest:
/s/ P.J. Kapsch
- --------------------------------
Trust Officer
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<PAGE>
EXHIBIT A
---------
FORM OF SERIES 1999-1 SENIOR NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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.
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTE
SENIOR SERIES 1999-1A [B]
CLASS A
No. R__________ $____________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
December 7, 1999 Variable _____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a corporation organized
under the laws of the State of Delaware (the "Corporation," which term includes
any successor corporation under the Indenture hereinafter referred to),
acknowledges itself indebted and hereby promises to pay to the registered holder
specified above, or registered assigns (the "Registered Holder"), but solely
from the revenues and receipts hereinafter specified and not otherwise, the
Principal Amount specified above on the Stated Maturity Date specified above
(subject to the right of prior redemption hereinafter mentioned), upon
presentation and surrender of this Note at the Principal Office of the Trustee
(as hereinafter defined), as Paying Agent for the Series 1999-1 Notes (as
hereinafter defined), or a duly appointed successor Paying Agent, and to pay
interest on said Principal Amount, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Holder hereof from
the date hereof
A-1
<PAGE>
until the payment of said Principal Amount has been made or duly provided for,
payable on each Interest Payment Date and at Maturity, at the Series 1999-1 Note
Interest Rate (as hereinafter described), and at the same rate per annum (to the
extent that the payment of such interest shall be legally enforceable) on
overdue installments of interest. Payment of interest on this Note on each
regularly scheduled Interest Payment Date shall be made by check or draft drawn
upon the Paying Agent and mailed to the person who is the Registered Holder
hereof as of 5:00 p.m. in the city in which the Principal Office of the Note
Registrar is located on the applicable Regular Record Date at the address of
such Registered Holder as it appears on the Note Register maintained by the Note
Registrar, or, if the Registered Holder of this Note is the Registered Holder of
Series 1999-1 Notes in the aggregate principal amount of $1,000,000 or more, at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, premium, if any, and
interest on this Note are payable at the Maturity hereof in the same manner as
the principal hereof, unless the date of such maturity is a regularly scheduled
Interest Payment Date, in which event interest is payable in the manner set
forth in the preceding sentence. Any interest not so timely paid or duly
provided for shall cease to be payable to the person who is the Registered
Holder hereof at the close of business on the Regular Record Date and shall be
payable to the person who is the Registered Holder hereof at the close of
business on a special record date for the payment of any such defaulted
interest. Such special record date shall be fixed by the Trustee whenever moneys
become available for payment of the defaulted interest, and notice of the
special record date shall be given to the Registered Holder hereof not less than
ten days prior thereto by first-class mail to such Registered Holder as shown on
the Note Register on a date selected by the Trustee, stating the date of the
special record date and the date fixed for the payment of such defaulted
interest. The principal of, premium, if any, and interest on this Note are
payable in lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued and
to be issued by the Corporation in one or more series pursuant to an Indenture
of Trust, dated as of December 1, 1999 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of December 1, 1999 (the "First Supplemental Indenture"), each between the
Corporation and U.S. Bank National Association, in Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
issued in an aggregate principal amount of $____________________ (the "Series
1999-1A [B] Notes"). The Series 1999-1A [B] Notes are issued simultaneously with
one other series of Class A Notes issued in the aggregate principal amount of
$____________________ (the "Series 1999-1B [A] Notes" and, together with the
Series 1999-1A [B] Notes, collectively referred to herein as the "Series 1999-1
Senior Notes"), and a series of Class B Notes issued in the aggregate principal
amount of $9,300,000 (the "Series 1999-1C Notes" and, together with the Series
1999-1 Senior Notes, collectively referred to herein as the "Series 1999-1
Notes"). The proceeds of the Series 1999-1 Notes will be used by the Corporation
to (a) acquire student loan notes incurred under the Higher Education Act and
under certain Alternative Loan Programs, (b) fund the Reserve Fund, (c) pay a
portion of the interest coming due on the Series 1999-1 Notes and (d) pay Costs
of Issuance of the Series 1999-1 Notes.
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<PAGE>
Reference is hereby made to the Indenture, copies of which are on file in
the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1999-1 Senior Notes are being issued as, and will constitute, Class A
Notes under the Indenture. The Series 1999-1C Notes are being issued as, and
will constitute, Class B Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the Corporation,
payable solely from the revenues and assets of the Corporation pledged therefor
under the Indenture, including certain notes evidencing Student Loans and the
proceeds of the Corporation's bonds, notes or other evidences of indebtedness,
if any, issued with respect to the Notes.
Interest payable on this Note shall be computed on the basis of actual days
elapsed and accrue daily from the date hereof (on the basis of a 360-day year),
and is payable on each regularly scheduled Interest Payment Date prior to the
Maturity of this Note and at the Maturity of this Note. The interest payable on
each Interest Payment Date for this Note shall be that interest which has
accrued through the last day of the last complete Interest Period immediately
preceding the Interest Payment Date or, in the case of the Maturity of this
Note, the last day preceding the date of such Maturity. The Series 1999-1 Note
Interest Rate shall be effective as of and on the first day (whether or not a
Business Day) of the applicable Interest Period and be in effect thereafter
through the end of such Interest Period.
The unpaid principal amount hereof from time to time outstanding shall bear
interest at a Series 1999-1 Note Auction Rate, as described below, payable on
each Interest Payment Date and at the Maturity hereof, such interest to accrue
from the later of the date hereof or the date through which interest has been
paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at the
Series 1999-1 Note Initial Interest Rate. Thereafter until an Auction Period
Adjustment, if any, this Note shall
A-3
<PAGE>
bear interest at a Series 1999-1 Note Auction Rate based on an Auction Period
that shall generally consist of 28 days, all as determined in the First
Supplemental Indenture.
The Series 1999-1 Note Auction Rate to be borne by this Note after the
Initial Interest Period for each Auction Period until an Auction Period
Adjustment, if any, shall be the lesser of (i) the Net Loan Rate in effect for
such Auction Period and (ii) the Auction Rate determined in accordance with the
applicable provisions of the First Supplemental Indenture.
In no event shall the Series 1999-1 Note Auction Rate on this Note exceed
18% per annum (the "Series 1999-1 Note Auction Rate Limitation").
The Interest Period, including, without limitation, an Auction Period, the
applicable Series 1999-1 Note Auction Rate, the method of determining the
applicable Series 1999-1 Note Auction Rate on each of the Series 1999-1A [B]
Notes and the Auction Procedures related thereto, including, without limitation,
required notices thereof to the Holders or Existing Holders of the Series 1999-1
Senior Notes, an Auction Period Adjustment, a change in the Auction Date and the
Interest Payment Dates will be determined in accordance with the terms,
conditions and provisions of the First Supplemental Indenture and the Auction
Agent Agreement, to which terms, conditions and provisions specific reference is
hereby made, and all of which terms, conditions and provisions are hereby
specifically incorporated herein by reference.
If the Auction Rate for the Series 1999-1A [B] Notes is greater than the
Net Loan Rate, then the Series 1999-1 Note Auction Rate applicable to the Series
1999-1 Notes for that Interest Period will be the Net Loan Rate. If the Series
1999-1 Note Auction Rate applicable to the Series 1999-1A [B] Notes for any
Interest Period is the Net Loan Rate, the Trustee shall determine the Carry-Over
Amount, if any, with respect to the Series 1999-1A [B] Notes for such Interest
Period. Such Carryover Amount shall bear interest calculated at a rate equal to
One- Month LIBOR from the Interest Payment Date for the Interest Period with
respect to which such Carry-Over Amount was calculated until paid. For purposes
of this Note, any reference to "principal" or "interest" herein shall not
include within the meaning of such words Carry-Over Amount or any interest
accrued on any such Carry-Over Amount. Such Carry-Over Amount shall be
separately calculated for each Series 1999-1A [B] Note by the Trustee during
such Interest Period in sufficient time for the Trustee to give notice to each
Holder of such Carry-Over Amount as required in the next succeeding sentence. On
the Interest Payment Date for an Interest Period with respect to which such
Carry-Over Amount has been calculated by the Trustee, the Trustee shall give
written notice to each Holder of the Carry-Over Amount applicable to each
Holder's Series 1999-1A [B] Note, which written notice may accompany the payment
of interest by check made to each such Holder on such Interest Payment Date or
otherwise shall be mailed on such Interest Payment Date by first class mail,
postage prepaid, to each such Holder at such Holder's address as it appears on
the registration books maintained by the Note Registrar. Such notice shall
state, in addition to such Carry-Over Amount, that, unless and until a Series
1999-1A [B] Note has been redeemed or has been deemed no longer Outstanding
under the First Supplemental Indenture (after which no Carry-Over Amount shall
be paid with respect to a Series 1999-1A [B] Note), (i) the Carry-Over Amount
(and interest accrued thereon) shall be paid by the Trustee on such Series
1999-1A [B] Note on the first occurring Interest Payment Date for a subsequent
Interest Period if and to the extent that (l) the Eligible
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<PAGE>
Carry-Over Make-Up Amount with respect to such Interest Period is greater than
zero, and (2) moneys are available pursuant to the terms of the First
Supplemental Indenture to pay such Carry-Over Amount (and interest accrued
thereon), and (ii) interest shall accrue on the Carry-Over Amount at a per annum
rate equal to One-Month LIBOR until such Carry-Over Amount is paid in full or is
cancelled.
The Carry-Over Amount for the Series 1999-1A [B] Notes shall be paid by the
Trustee on Outstanding Series 1999-1A [B] Notes on the first occurring Interest
Payment Date for a subsequent Interest Period if and to the extent that (i) the
Eligible Carry-Over Make-Up Amount with respect to such Interest Period is
greater than zero, and (ii) moneys in the Surplus Account are available on such
Interest Payment Date for transfer to the Interest Account for such purpose in
accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1999-1A [B] Note,
which Series 1999-1A [B] Note is to be redeemed or deemed no longer Outstanding
under the First Supplemental Indenture on such Interest Payment Date, shall be
paid to the Holder thereof on such Interest Payment Date to the extent that
moneys are available therefor in accordance with the provisions of the preceding
clause (b); provided, however, that any Carry-Over Amount (and any interest
accrued thereon) which is not so paid on such Interest Payment Date shall be
cancelled with respect to such Series 1999-1A [B] Note on such Interest Payment
Date and shall not be paid on any succeeding Interest Payment Date. To the
extent that any portion of the Carry-Over Amount (and any interest accrued
thereon) remains unpaid after payment of a portion thereof, such unpaid portion
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a Series 1999-1A [B]
Note, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Holder of such Series 1999-1A [B] Note of
the Carry-Over Amount remaining unpaid on such Series 1999-1A [B] Note.
The Interest Payment Date in such subsequent Interest Period on which such
Carry-Over Amount for the Series 1999-1A [B] Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1999-1A [B] Notes on an Interest Payment Date.
By purchasing Series 1999-1A [B] Notes, whether in an Auction or otherwise,
each purchaser of the Series 1999-1A [B] Notes, or its Broker-Dealer, must agree
and shall be deemed by such purchase to have agreed (i) to participate in
Auctions on the terms described in the First Supplemental Indenture, (ii) to
have its beneficial ownership of the Series 1999-1A [B] Notes maintained at all
times in Book-Entry Form for the account of its Participant, which in turn will
maintain records of such beneficial ownership, and (iii) to authorize such
Participant to disclose to the Auction Agent such information with respect to
such beneficial ownership as the
A-5
<PAGE>
Auction Agent may request. So long as the ownership of Series 1999-1A [B] Notes
is maintained in Book-Entry Form by the Securities Depository, an Existing
Holder may sell, transfer or otherwise dispose of Series 1999-1A [B] Notes only
pursuant to a Bid or Sell Order placed in an Auction or otherwise sell, transfer
or dispose of Series 1999-1A [B] Notes through a Broker-Dealer, provided that,
in the case of all transfers other than pursuant to Auctions, such Existing
Holder, its Broker-Dealer or its Participant advises the Auction Agent of such
transfer.
The determination of a Series 1999-1 Note Interest Rate by the Auction
Agent or any other authorized Person pursuant to the provisions of the First
Supplemental Indenture shall be conclusive and binding on the Holders of the
Series 1999-1A [B] Notes to which such Series 1999-1 Note Interest Rate applies,
and the Corporation and the Trustee may rely thereon for all purposes.
Notwithstanding any provision of this Note to the contrary, in no event
shall the cumulative amount of interest paid or payable on this Note (including
interest calculated as provided herein, plus any other amounts that constitute
interest on this Note under applicable law, which are contracted for, charged,
reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the principal balance of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1999-1 Notes shall be redeemed,
in part, on the first regularly scheduled Interest Payment Date occurring after
April 4, 2000 for which notice can be given in accordance with the requirements
of the First Supplemental Indenture, at a Redemption Price equal to 100% of the
principal amount of Series 1999-1 Notes so redeemed, from proceeds of the Series
1999-1 Notes constituting a portion of the Balance of the Acquisition Fund that
have not been used to acquire Eligible Loans and from that portion of the
Reserve Fund which, if left in the Reserve Fund upon such redemption, would
cause the Balance in the Reserve Fund to exceed the Reserve Fund Requirement,
calculated giving effect to such redemption.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1999-1A [B] Notes shall be
redeemed on any regularly scheduled Interest Payment Date, in whole or in part,
at a Redemption Price equal to 100% of the
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<PAGE>
principal amount thereof to be redeemed, from that portion of the balance of the
Series 1999-1 Surplus Subaccount that has been on deposit therein for at least
12 months, has not been used to acquire Student Loans and as to which the
Corporation has failed to certify to the Trustee is necessary to pay debt
service on the Outstanding Notes or on Outstanding Other Obligations, Carry-Over
Amounts, including accrued interest thereon, with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the
Indemnification Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1999-1A [B] Notes may, at the option of the Corporation, be redeemed on any
regularly scheduled Interest Payment Date, in whole or in part, at a Redemption
Price equal to 100% of the principal amount thereof to be redeemed, from amounts
credited to the Retirement Account for such purpose.
If not all Series 1999-1 Notes are to be redeemed, the particular Series
1999-1 Notes to be redeemed are to be selected as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at least 15
days before the Redemption Date to each Holder of Series 1999-1A [B] Notes to be
redeemed at his last address appearing on the Note Register; but no defect in or
failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Series 1999-1A [B] Notes not affected by such
defect or failure. All Series 1999-1A [B] Notes so called for redemption will
cease to bear interest on such Redemption Date, provided funds for their
redemption have been duly deposited, and, except for the purpose of payment,
shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1999-1A [B] Notes of a
denomination larger than $50,000 may be redeemed in part ($50,000 or an integral
multiple thereof) and that upon any partial redemption of any such Series
1999-1A [B] Note the same shall be surrendered in exchange for one or more new
Notes of the same series in authorized form for the unredeemed portion of
principal.
If provision is made for the payment of principal of, premium, if any, and
interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the Outstanding
Notes may and, under certain circumstances, shall be declared due and payable in
the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate principal amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate principal amount of Class B Notes at the
time
A-7
<PAGE>
Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate principal amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon surrender of
this Note for transfer at the Principal Office of the Note Registrar (which
shall be the Trustee unless and until an Authenticating Agent becomes the Note
Registrar under the Indenture) or at the Principal Office of a duly appointed
Authenticating Agent (the "Authenticating Agent," which term includes any
successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or such Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. Thereupon the Corporation shall execute and the
Trustee or the Authenticating Agent, as the case may be, shall authenticate and
deliver, in exchange for this Note, one or more new fully registered Notes in
the name of the transferee, of an authorized denomination, in aggregate
principal amount equal to the principal amount of this Note, of the same series
and bearing interest at the same rate. This Note may also be exchanged for one
or more other Notes of the same series upon surrender hereof at the Principal
Office of the Note Registrar or the Principal Office of an Authenticating Agent.
No Authenticating Agent will be initially appointed with respect to the Series
1999-1A [B] Notes. Notwithstanding the foregoing provisions of this paragraph,
no Series 1999-1A [B] Note shall be required to be transferred, (i) during a
period beginning at the opening of business fifteen days before any selection of
Series 1999-1A [B] Notes for redemption and ending at the close of business on
the day of such selection, or (ii) if such Series 1999-1A [B] Note has been
selected for redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of this Note, other than certain
exchanges specifically exempted under the Indenture and not involving any
transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating Agent,
the Note Registrar and any other agent of the Corporation may treat the Person
in whose name this Note is registered on the Note Register as the absolute owner
hereof for all purposes, whether or not this Note is overdue, and neither the
Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the Note
Registrar nor any other such agent shall be affected by notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all acts,
conditions and things required to have happened, to exist and to have been
A-8
<PAGE>
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of
Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be executed in
its name by the manual signatures of its President and Secretary.
Dated: ______________________
EDUCATION LOANS INCORPORATED
--------------------------------------
President
--------------------------------------
Secretary
----------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and issued
under the provisions of the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
-------------------------------------
Authorized Representative
A-9
<PAGE>
----------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ____________________________________
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of the
____________________________ within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
____________________________
A-10
<PAGE>
EXHIBIT B
---------
FORM OF SERIES 1999-1C NOTES
----------------------------
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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.
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTE
SUBORDINATE SERIES 1999-1C
CLASS B
No. R__________ $____________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
December 7, 1999 Variable _____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a corporation organized
under the laws of the State of Delaware (the "Corporation," which term includes
any successor corporation under the Indenture hereinafter referred to),
acknowledges itself indebted and hereby promises to pay to the registered holder
specified above, or registered assigns (the "Registered Holder"), but solely
from the revenues and receipts hereinafter specified and not otherwise, the
Principal Amount specified above on the Stated Maturity Date specified above
(subject to the right of prior redemption hereinafter mentioned), upon
presentation and surrender of this Note at the Principal Office of the Trustee
(as hereinafter defined), as Paying Agent for the Series 1999-1 Notes (as
hereinafter defined), or a duly appointed successor Paying Agent, and to pay
interest on said Principal Amount, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Holder hereof from
the date hereof until the payment of said
B-1
<PAGE>
Principal Amount has been made or duly provided for, payable on each Interest
Payment Date and at Maturity, at the Series 1999-1 Note Interest Rate (as
hereinafter described), and at the same rate per annum (to the extent that the
payment of such interest shall be legally enforceable) on overdue installments
of interest. Payment of interest on this Note on each regularly scheduled
Interest Payment Date shall be made by check or draft drawn upon the Paying
Agent and mailed to the person who is the Registered Holder hereof as of 5:00
p.m. in the city in which the Principal Office of the Note Registrar is located
on the applicable Regular Record Date at the address of such Registered Holder
as it appears on the Note Register maintained by the Note Registrar, or, if the
Registered Holder of this Note is the Registered Holder of Series 1999-1 Notes
in the aggregate principal amount of $1,000,000 or more, at the direction of
such Registered Holder received by the Paying Agent by 5:00 p.m. in the city in
which the Principal Office of the Paying Agent is located on the last Business
Day preceding the applicable Regular Record Date, by electronic transfer by the
Paying Agent in immediately available funds to an account designated by such
Registered Holder. In addition, premium, if any, and interest on this Note are
payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of, premium, if any,
and interest on this Note are payable in lawful money of the United States of
America.
This Note is one of an authorized issue of Notes (the "Notes"), issued and
to be issued by the Corporation in one or more series pursuant to an Indenture
of Trust, dated as of December 1, 1999 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of December 1, 1999, (the "First Supplemental Indenture"), each between the
Corporation and U.S. Bank National Association, in Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
of Class B Notes issued in an aggregate principal amount of $9,300,000 (the
"Series 1999-1C Notes"). The Series 1999-1C Notes are issued simultaneously with
two series of Class A Notes issued in the aggregate principal amount of
$117,000,000 (the "Series 1999-1 Senior Notes" and, together with the Series
1999-1C Notes, collectively referred to herein as the "Series 1999-1 Notes").
The proceeds of the Series 1999-1 Notes will be used by the Corporation to (a)
acquire student loan notes incurred under the Higher Education Act and under
certain Alternative Loan Programs, (b) fund the Reserve Fund, (c) pay a portion
of the interest coming due on the Series 1999-1 Notes and (d) pay Costs of
Issuance of the Series 1999-1 Notes.
Reference is hereby made to the Indenture, copies of which are on file in
the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the
B-2
<PAGE>
nature and extent of the security for the various classes of Notes and Other
Obligations secured thereunder; the student loan acquisition program being
financed by the issuance of the Notes; the revenues and other moneys pledged to
the payment of the principal of, premium, if any, and interest on the Notes and
the Other Obligations; the nature and extent and manner of enforcement of the
pledge; the conditions upon which Notes may be issued or Other Obligations may
be incurred by the Corporation thereunder, payable from such revenues and other
moneys thereunder as Senior Obligations, Subordinate Obligations or Class C
Notes; the conditions upon which the Indenture may be amended or supplemented
with or without the consent of the Holders of the Notes; the rights and remedies
of the Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1999-1 Senior Notes are being issued as, and will constitute, Class A
Notes under the Indenture. The Series 1999-1C Notes are being issued as, and
will constitute, Class B Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the Corporation,
payable solely from the revenues and assets of the Corporation pledged therefor
under the Indenture, including certain notes evidencing Student Loans and the
proceeds of the Corporation's bonds, notes or other evidences of indebtedness,
if any, issued with respect to the Notes.
The Series 1999-1C Notes constitute Class B Notes under the Indenture which
are subordinated in right of payment, the direction of remedies and certain
other matters in accordance with the terms of the Indenture to the rights of the
Holders of Class A Notes issued from time to time under the Indenture
(including, without limitation, the Prior Senior Notes and the Series 1999-1
Senior Notes) and Other Senior Beneficiaries thereunder. A failure to pay
principal of, premium, if any, or interest on this Class B Note will not
constitute an Event of Default under the Indenture if any Senior Obligation is
Outstanding.
Interest payable on this Note shall be computed on the basis of actual days
elapsed and accrue daily from the date hereof (on the basis of a 360-day year),
and is payable on each regularly scheduled Interest Payment Date prior to the
Maturity hereof and at the Maturity hereof. The interest payable on each
Interest Payment Date for this Note shall be that interest which has accrued
through the last day of the last complete Interest Period immediately preceding
the Interest Payment Date or, in the case of the Maturity hereof, the last day
preceding the date of such Maturity. The Series 1999-1 Note Interest Rate shall
be effective as of and on the first day (whether or not a Business Day) of the
applicable Interest Period and be in effect thereafter through the end of such
Interest Period.
The unpaid principal amount hereof from time to time outstanding shall bear
interest at a Series 1999-1 Note Auction Rate, as described below, payable on
each Interest Payment Date and at the Maturity hereof, such interest to accrue
from the later of the date hereof or the date through which interest has been
paid or duly provided for.
B-3
<PAGE>
During the Initial Interest Period, this Note shall bear interest at the
Series 1999-1 Note Initial Interest Rate. Thereafter until an Auction Period
Adjustment, if any, this Note shall bear interest at a Series 1999-1 Note
Auction Rate based on an Auction Period that shall generally consist of 28 days,
all as determined in the First Supplemental Indenture.
The Series 1999-1 Note Auction Rate to be borne by this Note after the
Initial Interest Period for each Auction Period until an Auction Period
Adjustment, if any, shall be the lesser of (i) the Net Loan Rate in effect for
such Auction Period and (ii) the Auction Rate determined in accordance with the
applicable provisions of the First Supplemental Indenture.
In no event shall the Series 1999-1 Note Auction Rate on this Note exceed
18% per annum (the "Series 1999-1 Note Auction Rate Limitation").
The Interest Period, including, without limitation, an Auction Period, the
applicable Series 1999-1 Note Auction Rate, the method of determining the
applicable Series 1999-1 Note Auction Rate on each of the Series 1999-1C Notes
and the Auction Procedures related thereto, including, without limitation,
required notices thereof to the Holders or Existing Holders of the Series 1999-1
Senior Notes, an Auction Period Adjustment, a change in the Auction Date and the
Interest Payment Dates will be determined in accordance with the terms,
conditions and provisions of the First Supplemental Indenture and the Auction
Agent Agreement, to which terms, conditions and provisions specific reference is
hereby made, and all of which terms, conditions and provisions are hereby
specifically incorporated herein by reference.
If the Auction Rate for the Series 1999-1C Notes is greater than the Net
Loan Rate, then the Series 1999-1 Note Auction Rate applicable to the Series
1999-1 Notes for that Interest Period will be the Net Loan Rate. If the Series
1999-1 Note Auction Rate applicable to the Series 1999-1C Notes for any Interest
Period is the Net Loan Rate, the Trustee shall determine the Carry- Over Amount,
if any, with respect to the Series 1999-1C Notes for such Interest Period. Such
Carry over Amount shall bear interest calculated at a rate equal to One-Month
LIBOR from the Interest Payment Date for the Interest Period with respect to
which such Carry-Over Amount was calculated until paid. For purposes of this
Note, any reference to "principal" or "interest" herein shall not include within
the meaning of such words Carry-Over Amount or any interest accrued on any such
Carry-Over Amount. Such Carry-Over Amount shall be separately calculated for
each Series 1999- 1C Note by the Trustee during such Interest Period in
sufficient time for the Trustee to give notice to each Holder of such Carry-Over
Amount as required in the next succeeding sentence. On the Interest Payment Date
for an Interest Period with respect to which such Carry-Over Amount has been
calculated by the Trustee, the Trustee shall give written notice to each Holder
of the Carry-Over Amount applicable to each Holder's Series 1999-1C Note, which
written notice may accompany the payment of interest by check made to each such
Holder on such Interest Payment Date or otherwise shall be mailed on such
Interest Payment Date by first class mail, postage prepaid, to each such Holder
at such Holder's address as it appears on the registration books maintained by
the Note Registrar. Such notice shall state, in addition to such Carry-Over
Amount, that, unless and until a Series 1999-1C Note has been redeemed or has
been deemed no longer Outstanding under the First Supplemental Indenture (after
which no Carry-Over Amount shall be paid with respect to a Series 1999-1C Note),
(i) the Carry-Over Amount (and interest accrued thereon) shall be paid by the
Trustee on such Series 1999-1C Note on the first occurring Interest Payment Date
for a subsequent
B-4
<PAGE>
Interest Period if and to the extent that (l) the Eligible Carry-Over Make-Up
Amount with respect to such Interest Period is greater than zero, and (2) moneys
are available pursuant to the terms of the First Supplemental Indenture to pay
such Carry-Over Amount (and interest accrued thereon), and (ii) interest shall
accrue on the Carry-Over Amount at a per annum rate equal to One-Month LIBOR
until such Carry-Over Amount is paid in full or is cancelled.
The Carry-Over Amount for the Series 1999-1C Notes shall be paid by the
Trustee on Outstanding Series 1999-1C Notes on the first occurring Interest
Payment Date for a subsequent Interest Period if and to the extent that (i) the
Eligible Carry-Over Make-Up Amount with respect to such Interest Period is
greater than zero, and (ii) moneys in the Surplus Account are available on such
Interest Payment Date for transfer to the Interest Account for such purpose in
accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1999-1C Note, which
Series 1999-1C Note is to be redeemed or deemed no longer Outstanding under the
First Supplemental Indenture on such Interest Payment Date, shall be paid to the
Holder thereof on such Interest Payment Date to the extent that moneys are
available therefor in accordance with the provisions of the preceding clause
(b); provided, however, that any Carry-Over Amount (and any interest accrued
thereon) which is not so paid on such Interest Payment Date shall be cancelled
with respect to such Series 1999-1C Note on such Interest Payment Date and shall
not be paid on any succeeding Interest Payment Date. To the extent that any
portion of the Carry-Over Amount (and any interest accrued thereon) remains
unpaid after payment of a portion thereof, such unpaid portion shall be paid in
whole or in part as required hereunder until fully paid by the Trustee on the
next occurring Interest Payment Date or Dates, as necessary, for a subsequent
Interest Period or Periods, if and to the extent that the conditions in the
first sentence of this paragraph are satisfied. On any Interest Payment Date on
which the Trustee pays less than all of the Carry-Over Amount (and any interest
accrued thereon) with respect to a Series 1999-1C Note, the Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph to
the Holder of such Series 1999-1C Note of the Carry-Over Amount remaining unpaid
on such Series 1999-1C Note.
The Interest Payment Date in such subsequent Interest Period on which such
Carry- Over Amount for the Series 1999-1C Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1999-1C Notes on an Interest Payment Date.
By purchasing Series 1999-1C Notes, whether in an Auction or otherwise,
each purchaser of the Series 1999-1C Notes, or its Broker-Dealer, must agree and
shall be deemed by such purchase to have agreed (i) to participate in Auctions
on the terms described in the First Supplemental Indenture, (ii) to have its
beneficial ownership of the Series 1999-1C Notes maintained at all times in
Book-Entry Form for the account of its Participant, which in turn will maintain
records of such beneficial ownership, and (iii) to authorize such Participant to
disclose to the Auction Agent such information with respect to such beneficial
ownership as the Auction Agent may request. So long as the ownership of Series
1999-1C Notes is maintained in Book-Entry Form by the Securities Depository, an
Existing Holder may sell, transfer or otherwise dispose of Series 1999-1C Notes
only pursuant to a Bid or Sell Order placed in an Auction or otherwise sell,
transfer or dispose of Series
B-5
<PAGE>
1999-1C Notes through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Participant advises the Auction Agent of such transfer.
The determination of a Series 1999-1 Note Interest Rate by the Auction
Agent or any other authorized Person pursuant to the provisions of the First
Supplemental Indenture shall be conclusive and binding on the Holders of the
Series 1999-1C Notes to which such Series 1999-1 Note Interest Rate applies, and
the Corporation and the Trustee may rely thereon for all purposes.
Notwithstanding any provision of this Note to the contrary, in no event
shall the cumulative amount of interest paid or payable on this Note (including
interest calculated as provided herein, plus any other amounts that constitute
interest on this Note under applicable law, which are contracted for, charged,
reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the principal balance of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1999-1 Notes shall be redeemed,
in part, on the first regularly scheduled Interest Payment Date occurring after
April 4, 2000 for which notice can be given in accordance with the requirements
of the First Supplemental Indenture, at a Redemption Price equal to 100% of the
principal amount of Series 1999-1 Notes so redeemed, from proceeds of the Series
1999-1 Notes constituting a portion of the Balance of the Acquisition Fund that
have not been used to acquire Eligible Loans and from that portion of the
Reserve Fund which, if left in the Reserve Fund upon such redemption, would
cause the Balance in the Reserve Fund to exceed the Reserve Fund Requirement,
calculated giving effect to such redemption.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1999-1C Notes shall be redeemed
on any regularly scheduled Interest Payment Date, in whole or in part, at a
Redemption Price equal to 100% of the principal amount thereof to be redeemed,
from that portion of the balance of the Series 1999-1 Surplus Subaccount that
has been on deposit therein for at least 12 months, has not been used to acquire
Student Loans and as to which the Corporation has failed to certify to the
Trustee is necessary to pay debt service on the Outstanding Notes or on
Outstanding Other Obligations, Carry-Over Amounts,
B-6
<PAGE>
including accrued interest thereon, with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the
Indemnification Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1999-1C Notes may, at the option of the Corporation, be redeemed on any
regularly scheduled Interest Payment Date, in whole or in part, at a Redemption
Price equal to 100% of the principal amount thereof to be redeemed, from amounts
credited to the Retirement Account for such purpose.
If not all Series 1999-1 Notes are to be redeemed, the particular Series
1999-1 Notes to be redeemed are to be selected as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at least 15
days before the Redemption Date to each Holder of Series 1999-1C Notes to be
redeemed at his last address appearing on the Note Register; but no defect in or
failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Series 1999-1C Notes so called for redemption will cease to bear interest on
such Redemption Date, provided funds for their redemption have been duly
deposited, and, except for the purpose of payment, shall no longer be protected
by the Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Series 1999-1C Notes of a denomination
larger than $50,000 may be redeemed in part ($100,000 or an integral multiple
thereof) and that upon any partial redemption of any such Series 1999-1C Note
the same shall be surrendered in exchange for one or more new Notes of the same
series in authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any, and
interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the Outstanding
Notes may and, under certain circumstances, shall be declared due and payable in
the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate principal amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate principal amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate principal amount of the Class B Notes at the
time Outstanding or Other Subordinate
B-7
<PAGE>
Beneficiaries, on behalf of the Holders of all the Notes, to waive certain past
defaults under the Indenture and their consequences. Any such consent or waiver
shall be conclusive and binding upon the Registered Holder of this Note and upon
all future Registered Holders hereof and of any Note issued in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Note.
This Note is transferable by the Registered Holder hereof upon surrender of
this Note for transfer at the Principal Office of the Note Registrar (which
shall be the Trustee unless and until an Authenticating Agent becomes the Note
Registrar under the Indenture) or at the Principal Office of a duly appointed
Authenticating Agent (the "Authenticating Agent," which term includes any
successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or the Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. Thereupon the Corporation shall execute and the
Trustee or the Authenticating Agent, as the case may be, shall authenticate and
deliver, in exchange for this Note, one or more new fully registered Notes in
the name of the transferee, of an authorized denomination, in aggregate
principal amount equal to the principal amount of this Note, of the same series
and bearing interest at the same rate. This Note may also be exchanged for one
or more other Notes of the same series upon surrender hereof at the Principal
Office of the Note Registrar or the Principal Office of an Authenticating Agent.
No Authenticating Agent will be initially appointed with respect to the Series
1999-1C Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1999- 1C Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1999-1C Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1999-1C Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of this Note, other than certain
exchanges specifically exempted under the Indenture and not involving any
transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating Agent,
the Note Registrar and any other agent of the Corporation may treat the Person
in whose name this Note is registered on the Note Register as the absolute owner
hereof for all purposes, whether or not this Note is overdue, and neither the
Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the Note
Registrar nor any other such agent shall be affected by notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of
Authentication hereon shall have
B-8
<PAGE>
been signed by the Trustee or by the Authenticating Agent by the manual
signature of one of its authorized representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be executed in
its name by the manual signatures of its President and Secretary.
Dated:________________________
EDUCATION LOANS INCORPORATED
--------------------------------------
President
--------------------------------------
Secretary
----------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and issued
under the provisions of the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
------------------------------------
Authorized Representative
B-9
<PAGE>
----------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ___________________________
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of the
____________________________ within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
____________________________
B-10
<PAGE>
EXHIBIT C
---------
NOTICE OF A PAYMENT DEFAULT
---------------------------
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A [B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and not been
cured with respect to the Notes identified above. Determination of the Series
1999-1 Note Interest Rate pursuant to the Auction Procedures will be suspended.
The Series 1999-1 Note Interest Rate on the Series 1999-1A [B][C] Notes for each
Auction Period commencing after the date of Payment Default will equal the
Non-Payment Rate as it is determined by the Trustee on the first day of such
Auction Period.
Terms used herein have the meanings set forth in the First Supplemental
Indenture of Trust relating to the above-referenced Notes.
Dated:_______________________
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------
C-1
<PAGE>
EXHIBIT D
---------
NOTICE OF CURE OF PAYMENT DEFAULT
---------------------------------
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A [B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the Notes
identified above has been waived or cured. The next Interest Payment Date is
____________________ and the next Auction Date is ______________________.
Terms used herein have the meanings set forth in the First Supplemental
Indenture of Trust relating to the above-referenced Notes.
Dated:_______________________
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
D-1
<PAGE>
EXHIBIT E
---------
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
--------------------------------------------
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A [B]
[SUBORDINATE SERIES 1999-1C]
Notice is hereby given that EDUCATION LOANS INCORPORATED proposes to change
the length of one or more Auction Periods with respect to the Notes identified
above, pursuant to the First Supplemental Indenture of Trust relating to such
Notes (the "First Supplemental Indenture"), as follows:
1. The change shall take effect on the Interest Payment Date for the
current Auction Period and the date of commencement of the next Auction Period
(the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only if
(A) the Trustee and the Auction Agent receive, by 11:00 a.m., New York City
time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a certificate from the Market Agent, as
required by the First Supplemental Indenture authorizing the change in length of
one or more Auction Periods and (B) Sufficient Bids exist on the Auction Date
for the Auction Period commencing on the Effective Date.
3. If the condition referred to in (A) above is not met, the Auction Rate
for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (A) is met but the condition referred to in (B) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Auction Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the Notes
described herein, that there were Sufficient Bids for such Notes at the Auction
immediately preceding the date of this Notice.
Terms used herein have the meanings set forth in the First Supplemental
Indenture.
Dated:_______________________
EDUCATION LOANS INCORPORATED
By:
------------------------------------
E-1
<PAGE>
EXHIBIT F
---------
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
---------------------------------------------
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A [B]
[SUBORDINATE SERIES 1999-1C]
Notice is hereby given that EDUCATION LOANS INCORPORATED hereby establishes
new lengths for one or more Auction Periods with respect to the Notes identified
above pursuant to the First Supplemental Indenture of Trust relating to such
Notes (the "First Supplemental Indenture"):
1. The change shall take effect on _______________________ , the Interest
Payment Date for the current Auction Period and the date of commencement of the
next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Interest
Payment Date shall be _______________________, or the next succeeding Business
Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period the Interest
Payment Dates shall be [ _______________________ (date) and every
_______________________ (number) _______________________ (day of week)
thereafter] [every _______________________ (number) (day of week) after the date
set forth in paragraph 2 above], or the next Business Day if any such day is not
a Business Day; provided, however, that the length of subsequent Auction Periods
shall be subject to further change hereafter as provided in Section 11 of the
First Supplemental Indenture.
4. The changes described in paragraphs 2 and 3 above shall take place only
upon delivery of this Notice and the satisfaction of other conditions set forth
in the First Supplemental Indenture and our prior notice dated
_______________________ regarding the proposed change.
Terms used herein have the meanings set forth in the First Supplemental
Indenture.
Dated:_______________________
EDUCATION LOANS INCORPORATED
By:
------------------------------------
F-1
<PAGE>
EXHIBIT G
---------
NOTICE OF CHANGE IN AUCTION DATE
--------------------------------
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A [B]
[SUBORDINATE SERIES 1999-1C]
Notice is hereby give by Salomon Smith Barney Inc., as Market Agent for the
Notes identified above, that, with respect to such Notes, the Auction Date is
hereby changed as follows:
1. With respect to such Notes, the definition of "Auction Date" shall be
deemed amended by substituting "_______________________ (number) Business Day"
in the third and fourth lines thereof and by substituting
"_______________________ (number) Business Days" for "two (2) Business Days" in
subsection (d) thereof.
2. This change shall take effect on _______________________, which shall be
the Auction Date for the Auction Period commencing on _______________________.
3. The Auction Date for such Notes shall be subject to further change
hereafter as provided in the First Supplemental Indenture of Trust relating to
such Notes (the "First Supplemental Indenture").
Terms used herein have the meanings set forth in the First Supplemental
Indenture.
Dated:_______________________
SALOMON SMITH BARNEY INC., as
Market Agent
By:
-----------------------------------
G-1
<PAGE>
EXHIBIT H-1
-----------
[List of EdLinc Student Loan Purchase Agreements]
H-1-1
<PAGE>
EXHIBIT H-2
-----------
[List of GOAL Funding Student Loan Purchase Agreements]
H-2-1
<PAGE>
EXHIBIT 4.3
================================================================================
AUCTION AGENT AGREEMENT
by and among
EDUCATION LOANS INCORPORATED,
as Issuer,
U.S. BANK NATIONAL ASSOCIATION,
as Trustee,
and
BANKERS TRUST COMPANY,
as Auction Agent
--------------------------
Dated as of December 1, 1999
--------------------------
Relating to
$126,300,000
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A AND B
SUBORDINATE SERIES 1999-1C
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions and Rules of Construction....................... 2
1.1 Terms Defined by Reference to First Supplemental
Indenture............................................... 2
1.2 Terms Defined Herein........................................ 2
1.3 Rules of Construction....................................... 3
Section 2. The Auction................................................. 4
2.1 Interest Rate on Series 1999-1 Notes;
Incorporation by Reference of Auction Procedures and
Settlement Procedures................................... 4
2.2 Preparation of Each Auction; Maintenance of
Existing Holder Registry................................ 5
2.3 All Hold Rates, Maximum Auction Rates, Net
Loan Rate, One-Month LIBOR and Three-Month LIBOR........ 7
2.4 Auction Schedule............................................ 8
2.5 Changes in Auction Periods or Auction Date.................. 9
2.6 Notice of Fee Rate Change...................................10
2.7 Notices to Existing Holders.................................10
2.8 Payment Default.............................................10
2.9 Broker-Dealers..............................................10
2.10 Access to and Maintenance of Auction Records................11
Section 3. Term of Agreement...........................................11
Section 4. Trustee.....................................................12
Section 5. Representations and Warranties of the Trustee...............12
Section 6. The Auction Agent...........................................13
6.1 Duties and Responsibilities.................................13
6.2 Rights of the Auction Agent.................................13
6.3 Auction Agent's Disclaimer..................................14
6.4 Compensation, Remedies and Indemnification..................14
6.5 Compensation of the Broker-Dealers..........................15
Section 7. Miscellaneous...............................................16
7.1 Governing Law...............................................16
7.2 Communications..............................................16
7.3 Entire Agreement............................................17
7.4 Benefits....................................................17
7.5 Amendment; Waiver...........................................17
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<PAGE>
7.6 Successors and Assigns......................................18
7.7 Severability................................................18
7.8 Execution in Counterparts...................................18
Exhibits
Exhibit A-1 -- List of Initial Broker-Dealers for the Series 1999-1A and
1999-1C Notes
Exhibit A-2 -- List of Initial Broker-Dealers for the Series 1999-1B Notes
Exhibit B -- Broker-Dealer Agreement
Exhibit C -- Notice of Ratings
Exhibit D -- Notice of Series 1999-1 Notes Outstanding
Exhibit E -- Notice of Fee Rate Change
Exhibit F -- Notice of a Payment Default
Exhibit G -- Settlement Procedures
Exhibit H -- Notice of Continuation of Auction Period
Exhibit I -- Notice of Series 1999-1 Note Interest Rate
-ii-
<PAGE>
THIS AUCTION AGENT AGREEMENT, dated as of December 1, 1999 (this "Auction
Agent Agreement"), is being entered into by and among EDUCATION LOANS
INCORPORATED, a Delaware corporation (together with any successors or assigns,
the "Issuer"), U.S. BANK NATIONAL ASSOCIATION, Minneapolis, Minnesota, a
national banking association duly established and existing under the laws of the
United States of America, as Trustee (together with any successors or assigns,
the "Trustee") under a certain First Supplemental Indenture of Trust, as
hereinafter defined and described, and BANKERS TRUST COMPANY, a New York banking
corporation (together with its successors and assigns, the "Auction Agent"),
acting not in its individual capacity but solely as agent for the Issuer.
W I T N E S S E T H:
WHEREAS, the Issuer proposes to cause the Trustee to authenticate and
deliver $126,300,000 aggregate principal amount of its Student Loan Asset-Backed
Notes, Series 1999-1, consisting of three series designated Student Loan
Asset-Backed Notes, Senior Series 1999-1A (the "Series 1999-1A Notes"), Student
Loan Asset-Backed Notes, Senior Series 1999-1B (the "Series 1999-1B Notes"), and
Student Loan Asset-Backed Notes, Subordinate Series 1999-1C (the "Series
1999-1C Notes" and, together with the Series 1999-1A Notes and the Series
1999-1B Notes, the " Series 1999-1 Notes"). The Series 1999-1 Notes are being
issued under the First Supplemental Indenture of Trust, dated as of December 1,
1999 (the "First Supplemental Indenture"), by and between the Issuer and the
Trustee and executed pursuant to an Indenture of Trust, dated as of December 1,
1999 (the "Original Indenture"), by and between the Trustee and the Issuer; and
WHEREAS, pursuant to Section 8 of the First Supplemental Indenture, the
Auction Agent has been appointed to act in the capacities set forth in this
Auction Agent Agreement; and
WHEREAS, the Trustee is entering into this Auction Agent Agreement at the
direction of the Issuer pursuant to the terms of the First Supplemental
Indenture;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Issuer, the Trustee and the Auction Agent agree as
follows:
-1-
<PAGE>
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to First Supplemental Indenture. Capitalized
terms used herein and not otherwise defined herein shall have the meanings given
such terms in the First Supplemental Indenture.
1.2 Terms Defined Herein. As used herein and in the Settlement Procedures
(as defined below), the following terms shall have the following meanings,
unless the context otherwise requires:
"Auction" shall have the meaning specified in Section 2.1 hereof.
"Auction Agent Fee" shall have meaning specified in Section 6.4(b) hereof.
"Auction Agent Fee Rate" shall mean the rate per annum determined pursuant
to Section 6.4(b) hereof, as the same may be changed from time to time in
accordance with Section 6.4(b) hereof, at which the fee to be paid to the
Auction Agent for services rendered by it hereunder and under the Broker-Dealer
Agreements accrues pursuant to Section 6.4(b) hereof.
"Auction Procedures" shall mean the provisions that are set forth in
Sections 4 through 11, inclusive, of the First Supplemental Indenture.
"Authorized Auction Agent Officer" shall mean, with respect to the Auction
Agent, each Managing Director, Vice President, Assistant Vice President and
Assistant Treasurer of the Auction Agent and every other officer of the Auction
Agent assigned to its Corporate Trust and Agency Group and every other officer
or employee of the Auction Agent designated as an "Authorized Auction Agent
Officer" for purposes hereof in a communication to the Trustee and the Issuer.
"Authorized Issuer Officer" shall mean, with respect to the Issuer, the
Chairman of the Board of Directors, the President, any Vice President or the
Secretary of the Issuer or any other person designated in writing by the Board
of Directors of the Issuer to the Auction Agent from time to time, which writing
may limit the functions which such other person may undertake as an Authorized
Issuer Officer hereunder.
"Authorized Trustee Representative" shall mean each Vice President,
Assistant Vice President or Trust Officer in the Corporate Trust Department of
the Trustee and every other officer or employee of the Trustee designated as an
"Authorized Trustee Representative" for purposes hereof in a written
communication to the Auction Agent and the Issuer.
"Broker-Dealer" shall mean (i) with respect to the Series 1999-1A Notes and
the Series 1999-1C Notes, a Person listed on Exhibit A-1 hereto, as such Exhibit
A-1 may be amended from time to time, and (ii) with respect to the Series
1999-1B Notes, a Person listed on Exhibit A-2 hereto, as such Exhibit A-2 may be
amended from time to time.
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<PAGE>
"Broker-Dealer Agreement" shall mean each agreement between the Auction
Agent and a Broker-Dealer substantially in the form attached hereto as Exhibit
B.
"Broker-Dealer Fee" shall have the meaning specified in Section 6.5(a)
hereof.
"Broker-Dealer Fee Rate" shall have the meaning specified in Section 6.5(b)
hereof.
"Business Day" shall mean a day of the year on which (i) banks located in
the city in which the Principal Office of the Trustee is located are not
required or authorized to remain closed, (ii) banks located in the city in which
the Principal Office of the Auction Agent, as set forth in Section 7.2 hereof,
is located are not required or authorized to remain closed, (iii) banks located
in the city in which the Principal Office of each Broker-Dealer, as set forth in
and for purposes of the applicable Broker-Dealer Agreement, is located are not
required or authorized to remain closed and (iv) The New York Stock Exchange is
not closed.
"Existing Holder Registry" shall mean the register maintained by the
Auction Agent pursuant to Section 2.2 hereof.
"Notice of Failure to Deliver or Make Payment" shall mean a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement.
"Notice of Fee Rate Change" shall mean a notice substantially in the form
of Exhibit E hereof.
"Notice of Payment Default" shall mean a notice substantially in the form
of Exhibit F hereto.
"Notice of Ratings" shall mean a notice substantially in the form of
Exhibit C hereto.
"Notice of Series 1999-1 Notes Outstanding" shall mean a notice
substantially in the form of Exhibit D hereto.
"Notice of Transfer" shall mean a notice substantially in the form of
Exhibit C to the Broker-Dealer Agreement.
"Participant" shall mean a member of, or participant in, the Securities
Depository.
"Settlement Procedures" shall mean the Settlement Procedures attached as
Exhibit G hereto.
1.3 Rules of Construction. Unless the context or use indicates another or
different meaning or intent, the following rules shall apply to the construction
of this Auction Agent Agreement:
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<PAGE>
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Auction Agent Agreement
nor shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of similar
import refer to this Auction Agent Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
(e) The rights and duties of the Trustee, the Auction Agent and the
Issuer under this Auction Agent Agreement shall apply to the Series 1999-1A
Notes, the Series 1999-1B Notes and the Series 1999-1C Notes, but
separately in each case. References to "Series 1999-1 Notes" shall, unless
the context clearly contemplates a reference to all the Series 1999-1
Notes, be deemed to refer only to a particular series of Series 1999-1
Notes.
Section 2. The Auction.
2.1 Interest Rate on Series 1999-1 Notes; Incorporation by Reference of
Auction Procedures and Settlement Procedures.
(a) During the Initial Interest Period, each of the Series 1999-1A
Notes, the Series 1999-1B Notes and the Series 1999-1C Notes shall bear
interest at the Series 1999-1 Note Initial Interest Rate for such series.
Thereafter, the Series 1999-1 Notes shall bear interest at the Series
1999-1 Note Interest Rate based on an Interest Period that shall be an
Auction Period. The Series 1999-1 Note Interest Rate on each series of the
Series 1999-1 Notes for each Auction Period shall be the lesser of (i) the
Net Loan Rate and (ii) the Auction Rate determined in accordance with
Sections 3 through 12 of the First Supplemental Indenture (not to exceed
18% per annum). Pursuant to Section 8 of the First Supplemental Indenture,
the Issuer has duly appointed Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures and to perform such other obligations
and duties as are herein set forth. Bankers Trust Company hereby accepts
such appointment and agrees that, on each Auction Date, it shall follow the
procedures set forth in this Section 2 and the Auction Procedures for the
purpose of, among other things, determining the Auction Rate, and
ultimately the Series 1999-1 Note Interest Rate for each series of the
Series 1999-1 Notes for each Auction Period other than the Initial Interest
Period. Each periodic operation of such procedures is hereinafter referred
to as an "Auction."
-4-
<PAGE>
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if
such provisions were fully set forth herein.
2.2 Preparation of Each Auction; Maintenance of Existing Holder Registry.
(a) A list of Broker-Dealers with respect to the Series 1999-1A
Notes and the Series 1999-1C Notes (showing Salomon Smith Barney Inc.
as the sole initial Broker- Dealer) is attached as Exhibit A-1 to this
Auction Agent Agreement. A list of Broker- Dealers with respect to the
Series 1999-1B Notes (showing Banc of America Securities LLC as the
sole initial Broker-Dealer) is attached as Exhibit A-2 to this Auction
Agent Agreement. Not later than seven days prior to any Auction Date
for which any change in such list of Broker-Dealers is to be
effective, the Trustee, at the direction of an Authorized Issuer
Officer, will notify the Auction Agent in writing of such change and,
if any such change is the addition of a Broker-Dealer to such list,
shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement manually signed by such
Broker-Dealer. The Auction Agent shall have entered into a
Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.
(b) In the event that any day that is scheduled to be an Auction
Date shall be changed after the Auction Agent shall have given the
notice of such Auction Date pursuant to clause (vii) of paragraph (a)
of the Settlement Procedures, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to
the Broker-Dealers not later than the earlier of 9:15 a.m., New York
City time, on the new Auction Date and 9:15 a.m., New York City time,
on the old Auction Date.
(c) (i) The Auction Agent shall maintain a current registry
of Persons that are Broker-Dealers, compiled initially on the
Closing Date as described below, and that hold Series 1999-1
Notes, for purposes of dealing with the Auction Agent in
connection with an Auction (such registry being herein called the
"Existing Holder Registry"). Such Persons shall constitute the
"Existing Holders" for purposes of dealing with the Auction Agent
in connection with an Auction. The Auction Agent shall indicate
in the Existing Holder Registry for each Existing Holder the
identity of the Broker-Dealer which submitted the most recent
Order in any Auction which resulted in such Existing Holder
continuing to hold or purchasing the Series 1999-1 Notes.
Pursuant to its Broker-Dealer Agreement, Salomon Smith Barney
Inc., as the sole initial Broker-Dealer with respect to the
Series 1999-1A Notes and Series 1999-1C Notes, has agreed to
provide to the Auction Agent on the Closing Date the names and
addresses of the Persons who are to be initially listed on the
Existing Holder Registry as constituting the initial Existing
Holders of Series 1999-1A Notes and Series 1999-1C Notes for
purposes of dealing with the Auction Agent in connection with an
Auction. Pursuant to its Broker-Dealer Agreement, Banc of America
Securities LLC, as the sole initial Broker-Dealer with respect to
the Series 1999-1B Notes, has agreed to provide to
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<PAGE>
the Auction Agent on the Closing Date the names and
addresses of the Persons who are to be initially listed on the
Existing Holder Registry as constituting the initial Existing
Holders of Series 1999-1B Notes for purposes of dealing with the
Auction Agent in connection with an Auction. The Auction Agent
may rely upon, as evidence of the identities of the Existing
Holders, such lists, the results of each Auction and notices from
any Existing Holder, Participant of any Existing Holder or
Broker-Dealer of any Existing Holder as described in Section
2.2(c)(iii) hereof.
(ii) The Trustee shall notify the Auction Agent when any
notice of redemption is sent to the Securities Depository as the
Holder of Series 1999-1 Notes not later than 11:00 a.m., New York
City time, on the date such notice is sent. Such notice with
respect to a redemption shall be substantially in the form of
Exhibit D hereto, Notice of Series 1999-1 Notes Outstanding. In
the event the Auction Agent receives from the Trustee written
notice of any partial redemption of any Series 1999-1 Notes, the
Auction Agent shall, at least two Business Days prior to the next
Auction, request each Participant to disclose to the Auction
Agent (upon selection by such Participant of the Existing Holders
whose Series 1999-1 Notes are to be redeemed) the aggregate
principal amount of such Series 1999-1 Notes of each such
Existing Holder, if any, which are to be redeemed; provided the
Auction Agent has been furnished with the name and telephone
number of a person or department at such Participant from which
it is to request such information. In the absence of receiving
any such information with respect to any Existing Holder, from
such Existing Holder's Participant or otherwise, the Auction
Agent may continue to treat such Existing Holder as the
beneficial owner of the principal amount of Series 1999-1 Notes
shown in the Existing Holder Registry.
(iii) The Auction Agent shall be required to register in the
Existing Holder Registry a transfer of Series 1999-1 Notes from
an Existing Holder to another Person only if such transfer is
made to a Person through a Broker-Dealer and if (A) such transfer
is pursuant to an Auction or (B) the Auction Agent has been
notified in writing (1) in a notice substantially in the form of
a Notice of Transfer by such Existing Holder, by the Participant
of such Existing Holder or by the Broker-Dealer of such Existing
Holder of such transfer, or (2) in a notice substantially in the
form of a Notice of Failure to Deliver or Make Payment by the
Broker-Dealer of any Person that purchased or sold Series 1999-1
Notes in an Auction of the failure of such Series 1999-1 Notes to
be transferred as a result of the Auction. The Auction Agent is
not required to accept any Notice of Transfer or Notice of
Failure to Deliver or Make Payment delivered prior to an Auction
unless it is received by the Auction Agent by 3:00 p.m., New York
City time, on the Business Day next preceding the applicable
Auction Date.
(d) The Auction Agent may request that the Broker-Dealers, as set
forth in the Broker-Dealer Agreements, provide the Auction Agent with the
aggregate principal amount of Series 1999-1 Notes held by such
Broker-Dealers for purposes of the Existing
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<PAGE>
Holder Registry, as well as with a list of their respective customers
that such Broker- Dealers believe are Existing Holders of the Series 1999-1
Notes and the aggregate principal amount of Series 1999-1 Notes
beneficially owned by each such customer. Except as permitted by Section
2.10 hereof, the Auction Agent shall keep confidential any such information
and shall not disclose any such information so provided to any person other
than the relevant Broker-Dealer, the Issuer and the Trustee, provided that
the Auction Agent reserves the right to disclose any such information if it
is advised by its counsel that its failure to do so would be unlawful or
would expose the Auction Agent to liability, claim or damage for which the
Auction Agent has not previously received indemnity reasonably satisfactory
to it. The Auction Agent shall notify the Issuer, the Trustee and each
Broker-Dealer promptly upon receipt of any request or demand to disclose
such information and shall cooperate with any party seeking a protective
order or similar relief.
(e) The Auction Agent shall send by telecopy or other means a copy of
any Notice of Series 1999-1 Notes Outstanding received from the Trustee to
each Broker- Dealer in accordance with Section 4.3 of the applicable
Broker-Dealer Agreement.
2.3 All Hold Rates, Maximum Auction Rates, Net Loan Rate, One-Month
LIBOR and Three-Month LIBOR.
(a) On each Auction Date, the Auction Agent shall determine the All
Hold Rate, the Maximum Auction Rate and One-Month LIBOR or Three-Month
LIBOR, as the case may be. The Net Loan Rate with respect to each Auction
Date shall be determined and written notice thereof given to the Auction
Agent in accordance with Section 6 of the First Supplemental Indenture. Not
later than 9:30 a.m., New York City time, on each Auction Date, the Auction
Agent shall notify the Trustee and the Broker-Dealers of the All Hold Rate,
the Maximum Auction Rate, the Net Loan Rate and One-Month LIBOR or
Three-Month LIBOR, as the case may be, so determined. On or within three
Business Days after the Closing Date, the Issuer shall give written notice
to the Auction Agent of the initial ratings on the Series 1999-1 Notes by
Moody's and Fitch substantially in the form of the Notice of Ratings.
Thereafter, if there is a change in one of both of such ratings, the Issuer
shall give written notice to the Auction Agent substantially in the form of
the Notice of Ratings within three Business Days of its receipt of notice
of such change, but not later than the close of business on the Business
Day immediately preceding an Auction Date if the Issuer has received
written notice of such change in a rating or ratings prior to 12:00 noon,
New York City time, on such Business Day, and the Auction Agent shall take
into account such change in rating or ratings for purposes hereof and any
Auction so long as such Notice of Ratings is received by the Auction Agent
no later than the close of business on such Business Day.
(b) (i) If, on any Auction Date for an Auction Period, an Auction
is not held for any reason, then the Series 1999-1 Note Interest Rate
for the next succeeding Auction Period shall be the Net Loan Rate.
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(ii) If the ownership of the Series 1999-1 Notes is no longer
maintained in Book-Entry Form by the Securities Depository, no further
Auctions shall be held and the Series 1999-1 Note Interest Rate for
each Interest Period commencing after the delivery of certificated
Series 1999-1 Notes pursuant to Section 17 of the First Supplemental
Indenture shall equal the lesser of the Net Loan Rate and the Maximum
Auction Rate as determined by the Trustee on the Business Day
immediately preceding the first day of such subsequent Interest Period
as provided in Section 3 of the First Supplemental Indenture.
(iii) If a Payment Default shall have occurred with respect to a
series of Series 1999-1 Notes, the Series 1999-1 Note Interest Rate
with respect to such series for each Interest Period commencing on or
immediately after the occurrence of such Payment Default, and for each
Interest Period thereafter, to and including the Interest Period, if
any, during which, or commencing less than two Business Days after,
such Payment Default is cured, shall equal the Non-Payment Rate, as
determined by the Trustee on the first day of such Interest Period as
provided in Section 3 of the First Supplemental Indenture. The Series
1999-1 Note Interest Rate for each Interest Period commencing at least
two Business Days after any cure of a Payment Default shall be
determined through implementation of the Auction Procedures.
2.4 Auction Schedule. The Auction Agent shall conduct Auctions on the
Auction Date in accordance with the schedule set forth below. Such schedule may
be changed by the Auction Agent with the consent of the Trustee and the Market
Agent, which consent shall not be unreasonably withheld or delayed. The Auction
Agent shall give notice pursuant to Section 4.3 of the applicable Broker-Dealer
Agreement of any such change to each Broker-Dealer. Such notice shall be given
prior to the first Auction Date on which any such change shall be effective.
By 9:30 a.m. The Auction Agent advises the Trustee and the
Broker-Dealers of the Maximum Auction Rate, the
All Hold Rate, the Net Loan Rate and One-Month
LIBOR or Three-Month LIBOR, as the case may be,
to be used in determining the Auction Rate under
the Auction Procedures, the First Supplemental
Indenture and this Auction Agent Agreement.
9:30 a.m. - 12:30 p.m. The Auction Agent assembles information
communicated to it by Broker-Dealers as provided
in Section 4(c)(i) of the First Supplemental
Indenture. The Submission Deadline is 12:30 p.m.,
New York City time.
Not earlier than The Auction Agent makes the determina-
12:30 p.m. tion pursuant to Section 4(c)(i) of the First
Supplemental Indenture. Submitted Bids and
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Submitted Sell Orders are accepted and rejected in
whole or in part and principal amount of Series
1999-1 Notes is allocated as provided in Section
4(d) of the First Supplemental Indenture.
By approximately The Auction Agent advises the Trustee and
3:00 p.m.1/ or the Broker-Dealers of the results of
4:00 p.m.2/ the Auction as provided in Section 4(c)(ii)
of the First Supplemental Indenture.
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1/ If the Series 1999-1 Note Interest Rate is the Auction Rate.
2/ If the Series 1999-1 Note Interest Rate is the Net Loan Rate.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.5 Changes in Auction Periods or Auction Date.
(a) Changes in Auction Period or Periods.
(i) The Auction Agent shall mail any notice delivered to it
pursuant to Section 10(a) of the First Supplemental Indenture to the
Existing Holders within two Business Days of its receipt thereof.
(ii) The Auction Agent shall deliver any certificate delivered to
it pursuant to Section 10(c) of the First Supplemental Indenture to
the Broker-Dealers not later than 3:00 p.m., New York City time, on
the last Business Day preceding the next Auction Date by telecopy or
similar means.
(iii) If, after delivery to the Auction Agent of the notice
referred to in Section 10(a) of the First Supplemental Indenture, the
Auction Agent fails to receive the certificate referred to in Section
10(c) of the First Supplemental Indenture by 11:00 a.m., New York City
time, on the last Business Day preceding the next Auction Date, the
Auction Agent shall deliver a notice of such failure in substantially
the form of Exhibit H hereto to the Broker-Dealers not later than 3:00
p.m., New York City time, on such Business Day by telecopy or other
similar means.
(iv) If, after delivery to the Auction Agent of the notice
referred to in Section 10(a) and the certificate referred to in
Section 10(c) of the First Supplemental Indenture, Sufficient Bids are
not received by the Auction Agent by the Submission Deadline, the
Auction Agent shall notify the Broker-Dealers not later than 3:00
p.m., New York City time, on such Auction Date by telephone confirmed
in writing in substantially the form of Exhibit I hereto the next
Business Day.
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(b) Changes in Auction Date. The Auction Agent shall mail any notice
delivered to it pursuant to Section 11 of the First Supplemental Indenture
to the Broker-Dealers within three Business Days of its receipt thereof.
2.6 Notice of Fee Rate Change. If the Auction Agent Fee Rate is changed
pursuant to the provisions of Section 6.4(b) hereof or the Broker-Dealer Fee
Rate is changed pursuant to the provisions of 6.5(b) hereof, the Auction Agent
shall mail a Notice of Fee Rate Change (i) to the Trustee with respect to a
change in the Auction Agent Fee Rate and the Broker- Dealer Fee Rate and (ii) to
the Broker-Dealers with respect to a change in the Broker-Dealer Fee Rate, in
each case within two Business Days of such change.
2.7 Notices to Existing Holders. The Auction Agent shall be entitled to
rely upon the address of each Broker-Dealer as provided in Section 4.3 of the
applicable Broker- Dealer Agreement in connection with any notice to each
Broker-Dealer, as an Existing Holder, required to be given by the Auction Agent.
2.8 Payment Default.
(a) After delivery by the Trustee to the Auction Agent of a notice
that a Payment Default shall have occurred, the Auction Agent shall, on the
Business Day following its receipt of the same, deliver a Notice of Payment
Default to the Broker-Dealers by telecopy or other similar means.
(b) The Auction Agent shall deliver a copy of any notice received by
it from the Trustee to the effect that a Payment Default has been cured to
the Broker-Dealers on the Business Day following its receipt of the same by
telecopy or other similar means.
2.9 Broker-Dealers.
(a) If the Auction Agent is provided with a copy of a Broker-Dealer
Agreement, which has been manually signed, with any person listed on
Exhibit A-1 or Exhibit A-2 hereto to which the Trustee, at the direction of
an Authorized Issuer Officer, shall have consented, it shall enter into
such Broker-Dealer Agreement with such person. The Issuer hereby directs
the Trustee to consent to Salomon Smith Barney Inc. as the sole initial
Broker-Dealer with respect to the Series 1999-1A Notes and the Series
1999-1C Notes, and to Banc of America Securities LLC as the sole initial
Broker-Dealer with respect to the Series 1999-1B Notes.
(b) The Auction Agent may, at the written direction of an Authorized
Issuer Officer, and with the approval of Salomon Smith Barney Inc., so long
as Salomon Smith Barney Inc. is acting as a Broker-Dealer with respect to
the Series 1999-1A Notes and the Series 1999-1C Notes, enter into a
Broker-Dealer Agreement with respect to the Series 1999-1A Notes and the
Series 1999-1C Notes with any other person who requests to be selected to
act as a Broker-Dealer. The Auction Agent may, at the written direction of
an Authorized Issuer Officer, and with the approval of Banc of America
Securities LLC, so
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long as Banc of America Securities LLC is acting as a Broker-Dealer
with respect to the Series 1999-1B Notes, enter into a Broker-Dealer
Agreement with respect to the Series 1999-1B Notes with any other person
who requests to be selected to act as a Broker- Dealer. The Auction Agent
shall have entered into a Broker-Dealer Agreement with each Broker-Dealer
prior to the participation of any such Broker-Dealer in any Auction.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein at the direction of an Authorized Issuer Officer.
2.10 Access to and Maintenance of Auction Records. The Auction Agent shall
afford to the Trustee, the Issuer and their respective agents, independent
public accountants and counsel access, at reasonable times during normal
business hours, to review and make extracts or copies (at no cost to the Auction
Agent) of all books, records, documents and other information concerning the
conduct and results of Auctions, provided that any such agent, accountant or
counsel shall furnish the Auction Agent with a letter from the Trustee or the
Issuer requesting that the Auction Agent afford such person access. The Auction
Agent shall maintain records relating to any Auction for a period of two years
after such Auction (or for such longer period requested by the Trustee or the
Issuer, not to exceed four years after each Auction), and such records shall, in
reasonable detail, accurately and fairly reflect the actions taken by the
Auction Agent hereunder. At the end of such period, the Auction Agent shall
deliver such records to the Trustee. The Trustee and the Issuer agree to keep
any information regarding the conduct and results of the Auctions, including,
without limitation, information regarding customers of any Broker-Dealer,
received from the Auction Agent in connection with this Auction Agent Agreement
confidential and shall not disclose such information or permit the disclosure of
such information without the prior written consent of the applicable
Broker-Dealer to anyone except such agent, accountant or counsel engaged to
audit or review the results of Auctions as permitted by this Section 2.10. Any
such agent, accountant or counsel, before having access to such information,
shall agree to keep such information confidential and not to disclose such
information or permit disclosure of such information without the prior written
consent of the applicable Broker-Dealer, except as may otherwise be required by
law.
Section 3. Term of Agreement.
(a) This Auction Agent Agreement shall terminate on the earlier to
occur of (i) the satisfaction and discharge of the First Supplemental
Indenture with respect to the Series 1999-1 Notes or this Auction Agent
Agreement and (ii) the date on which this Auction Agent Agreement is
terminated in accordance with this Section 7.9. The Trustee may terminate
this Auction Agent Agreement in accordance with Section 8(a) of the First
Supplemental Indenture. The Auction Agent may terminate this Auction Agent
Agreement upon written notice to the Trustee, the Issuer and the Market
Agent on the date specified in such notice, which date shall be no earlier
than 90 days after the date of delivery of such notice. Notwithstanding the
foregoing, the provisions of Section 2 hereof shall terminate upon the
delivery of certificates representing Series 1999-1 Notes pursuant to
Section 17 of the First Supplemental Indenture. Notwithstanding the
foregoing, the Auction Agent may terminate this Agreement without further
notice if,
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within 25 days after notifying in writing the Trustee, the Issuer and
the Market Agent that it has not received payment of any Auction Agent Fee
due it in accordance with the terms hereof, the Auction Agent does not
receive such payment. Any resignation of the Auction Agent or termination
of this Auction Agent Agreement, other than as described in the preceding
sentence of this paragraph, shall not become effective until a successor
Auction Agent has been appointed and acceptance of such appointment by such
successor Auction Agent. The Issuer and the Trustee agree to diligently
proceed to appoint a successor Auction Agent. However, if a successor
Auction Agent shall not have been appointed within 60 days from the date of
such notice of resignation, the resigning Auction Agent may petition any
court of competent jurisdiction for the appointment of a successor Auction
Agent.
(b) Except as otherwise provided in this Section 3(b), the respective
rights and duties of the Trustee, the Issuer and the Auction Agent under
this Auction Agent Agreement shall cease upon termination of this Auction
Agent Agreement. The Trustee's representations and warranties to the
Auction Agent under Section 5 hereof, and the Issuer's obligations to the
Auction Agent under Section 6.4 hereof and to the Broker- Dealers under
Section 6.5 hereof, shall survive the termination of this Auction Agent
Agreement subject to Section 4 hereof. Upon termination of this Auction
Agent Agreement, the Auction Agent shall, upon request, promptly deliver to
the Trustee copies of all books and records maintained by it with respect
to Series 1999-1 Notes in connection with its duties hereunder.
Section 4. Trustee. All privileges, rights and immunities given to the
Trustee in the First Supplemental Indenture are hereby extended to and
applicable to the Trustee's obligations hereunder.
Section 5. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Auction Agent and the
Issuer as follows:
5.1 The Trustee (i) has been duly incorporated and is validly existing and
in good standing as a national banking association under the laws of the United
States, and (ii) has all necessary authority, approvals, consents (whether from
the Issuer or otherwise) to enter into and perform its obligations under this
Auction Agent Agreement. This Auction Agent Agreement has been duly and validly
authorized, executed and delivered by the Trustee and constitutes the legal,
valid, binding and enforceable obligation of the Trustee.
5.2 Neither the execution, delivery and performance of this Auction Agent
Agreement, the consummation of the transactions contemplated hereby nor the
fulfillment of or compliance with the terms and conditions of this Auction Agent
Agreement will conflict with, violate or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, any law or
regulation, any order or decree of any court or public authority having
jurisdiction over the Trustee, or any mortgage, indenture, contract, agreement
or undertaking to
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which the Trustee is a party or by which it is bound, or the organizational
documents pursuant to which the Trustee has been created and under which it is
operating.
5.3 All approvals, consents and orders of any governmental authority,
legislative body, board, agency or commission having jurisdiction over the
Trustee which would constitute a condition precedent to or the absence of which
would materially adversely affect the due performance by the Trustee of its
obligations under this Auction Agent Agreement have been obtained.
Section 6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent of the Issuer and owes
no fiduciary duties to any person (other than the Issuer) by reason of this
Auction Agent Agreement. The Auction Agent undertakes to perform such
duties and only such duties as are specifically set forth in this Auction
Agent Agreement, and no implied covenants or obligations shall be read into
this Auction Agent Agreement by means of the provisions of the First
Supplemental Indenture or otherwise against the Auction Agent.
(b) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or omitted or for
any error of judgment made by it in the performance of its duties under
this Auction Agent Agreement. The Auction Agent shall not be liable for any
error of judgment made in good faith unless the Auction Agent shall have
been negligent in ascertaining the pertinent facts.
(c) The Auction Agent shall not agree to any amendment to a
Broker-Dealer Agreement without the prior written consent of the Issuer,
which consent shall not be unreasonably withheld.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon
any written instruction, notice, request, direction, consent, report,
certificate, form of bond certificate or other instrument, paper or
document believed by it to be genuine. The Auction Agent shall not be
liable for acting upon any telephone communication authorized hereby which
the Auction Agent believes in good faith to have been given by the Trustee
or by a Broker- Dealer. The Auction Agent may record telephone
communications with the Trustee or with Broker-Dealers or both.
(b) The Auction Agent may consult with counsel of its choice, and the
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
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(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed by it with due care hereunder.
6.3 Auction Agent's Disclaimer. The Auction Agent makes no representation
as to the correctness of the recitals in this Auction Agent Agreement or the
Broker-Dealer Agreement or the validity or adequacy of the Series 1999-1 Notes.
6.4 Compensation, Remedies and Indemnification.
(a) With respect to each series of Series 1999-1 Notes, not later than
12:00 noon, New York City time, on the first Interest Payment Date relating
to such series, the Issuer, pursuant to Section 5(b) of the First
Supplemental Indenture, shall pay in arrears to the Auction Agent, solely
from moneys available therefor in the Administration Fund, an amount in
cash equal to the product of (i) the Auction Agent Fee Rate times (ii) a
fraction, the numerator of which is the number of days from the Closing
Date to such Interest Payment Date (or, if such series of Series 1999-1
Notes ceased to be outstanding prior to such Interest Payment Date, the
date on which such series ceased to be outstanding) and the denominator of
which is 360, times (iii) the aggregate principal amount of Series 1999-1
Notes of such series on the date of original issuance of the Series 1999-1
Notes.
(b) With respect to each series of Series 1999-1 Notes any of which
were outstanding at any time during the related period, not later than
12:00 noon, New York City time, on each Interest Payment Date thereafter
relating to such series, the Issuer, pursuant to Section 5(b) of the First
Supplemental Indenture, shall pay in arrears to the Auction Agent, solely
from moneys available therefor in the Administration Fund, an amount in
cash equal to the product of (i) the Auction Agent Fee Rate times (ii) a
fraction, the numerator of which is the number of days from the preceding
Interest Payment Date to the current Interest Payment Date (or, if such
series of Series 1999-1 Notes ceased to be outstanding prior to such
current Interest Payment Date, the date on which such series ceased to be
outstanding) and the denominator of which is 360, times (iii) the average
principal amount of Series 1999-1 Notes of such series outstanding during
the period between such preceding Interest Payment Date (or the Closing
Date, in the case of the first Interest Payment Date) and the current
Interest Payment Date (or, if such series of Series 1999-1 Notes ceased to
be outstanding prior to such current Interest Payment Date, the date on
which such series ceased to be outstanding) (together with the fee
described in Section 6.4(a), the "Auction Agent Fee"). The Auction Agent
Fee Rate may be adjusted from time to time with the approval of an
Authorized Issuer Officer upon a written request of the Auction Agent
delivered to the Trustee and the Issuer. The Initial
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Auction Agent Fee Rate shall be .02%. Any change in the Auction Agent
Fee Rate shall be effective on the Auction Date next succeeding such
change.
(c) The Issuer shall reimburse the Auction Agent, upon its request,
for all reasonable expenses, disbursements and advances, if any, incurred
or made by the Auction Agent in accordance with any provision of this
Auction Agent Agreement or the Broker-Dealer Agreements (including the
reasonable compensation, expenses and disbursements of its agents and
counsel) from amounts available therefor in the Administration Fund. The
Issuer shall indemnify and hold harmless the Auction Agent for and against
any loss, liability or expense incurred without negligence or bad faith on
the Auction Agent's part, arising out of or in connection with the
acceptance or administration of its agency under this Auction Agent
Agreement and the Broker-Dealer Agreements, including the reasonable costs
and expenses (including the reasonable fees and expenses of its counsel) of
defending itself against any such claim or liability in connection with its
exercise or performance of any of its duties hereunder and thereunder and
of enforcing this indemnification provision; provided that the Issuer shall
not indemnify the Auction Agent pursuant to this Section 6.4(c) for any
fees and expenses incurred by the Auction Agent in the normal course of
performing its duties hereunder and under the Broker-Dealer Agreements,
such fees and expenses being payable as provided in Section 6.4(a) and (b)
above.
6.5 Compensation of the Broker-Dealers.
(a) With respect to each series of the Series 1999-1 Notes, not later
than 12:00 noon, New York City time, on each Interest Payment Date with
respect to each Interest Period immediately following an Auction Date
relating to such series, the Issuer, pursuant to Section 5(b) of the First
Supplemental Indenture, shall pay to the Auction Agent, solely from moneys
available therefor in the Administration Fund, an amount in cash equal to
the product of (i) the Broker-Dealer Fee Rate times (ii) a fraction, the
numerator of which is the number of days from the preceding Interest
Payment Date (or from the Closing Date, in the case of the first Interest
Payment Date) to the current Interest Payment Date (or, if such series of
1999-1 Notes ceased to be outstanding prior to such current Interest
Payment Date, the date on which such series ceased to be outstanding) and
the denominator of which is 360, times (iii) the aggregate principal amount
of Series 1999-1 Notes of such series outstanding at the close of business
on the date of original issuance of the Series 1999-1 Notes (in the case of
the initial Interest Payment Date) or at the close of business on the
preceding Interest Payment Date (in the case of all succeeding Interest
Payment Dates), as the case may be (the "Broker-Dealer Fee"). The Auction
Agent shall advise the Issuer of the amount referred to in the preceding
sentence not later than 4:00 p.m., New York City time, at least two
Business Days preceding such Interest Payment Date. The Auction Agent shall
apply such monies as set forth in Section 2.5 of the Broker-Dealer
Agreements.
(b) After retaining an amount equal to the Auction Agent Fee as
provided in Section 6.4 above, the Auction Agent shall pay the
Broker-Dealer Fee as provided in
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Section 6.5(a) above solely out of amounts received by the Auction
Agent pursuant to Section 5(b) of the First Supplemental Indenture. The
Auction Agent shall advise the Issuer at least annually, at the request of
an Authorized Issuer Officer, of the prevailing rate. The Broker-Dealer Fee
Rate with respect to the Series 1999-1A Notes and Series 1999-1C Notes may
be adjusted from time to time with the approval of an Authorized Issuer
Officer upon a written request of the Auction Agent or Salomon Smith Barney
Inc., as the initial Broker-Dealer with respect to the Series 1999-1A Notes
and Series 1999-1C Notes, delivered to the Trustee and the Issuer. The
Broker-Dealer Fee Rate with respect to the Series 1999-1B Notes may be
adjusted from time to time with the approval of an Authorized Issuer
Officer upon a written request of the Auction Agent or Banc of America
Securities LLC, as the initial Broker-Dealer with respect to the Series
1999-1B Notes, delivered to the Trustee and the Issuer. The initial
Broker-Dealer Fee Rate for all Series 1999-1 Notes shall be .25% per annum.
If the Broker-Dealer Fee Rate is changed pursuant to the terms hereof, the
Trustee shall notify the Auction Agent thereof. Any changes in the
Broker-Dealer Fee Rate shall be effective on the Auction Date next
succeeding such change.
Section 7. Miscellaneous.
7.1 Governing Law. This Auction Agent Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in such state, it being understood that the
corporate powers and legal capacity of the Issuer shall be construed and
interpreted in accordance with the laws of the State of South Dakota.
7.2 Communications. Except for (i) communications authorized to be made by
telephone pursuant to this Auction Agent Agreement or the Auction Procedures and
(ii) communications in connection with Auctions (other than those expressly
required to be in writing), all notices, requests and other communications to
any party hereunder shall be in writing (including facsimile or similar writing)
and shall be given to such party addressed to it at its address, or facsimile
number set below:
If to the Trustee,
addressed: U.S. Bank National Association
141 North Main Avenue
Sioux Falls, South Dakota 57117
Attn: Corporate Trust Department
Telephone: (605) 339-8725
Facsimile: (605) 333-3813
If to the Issuer,
addressed: Education Loans Incorporated
105 First Avenue Southwest, Suite 200
Aberdeen, South Dakota 57401
Attn: President
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Telephone: (605) 622-4590
Facsimile: (605) 622-4547
If to the Auction Agent,
addressed: Bankers Trust Company
Corporate Trust and Agency Group
4 Albany Street
New York, New York 10006
Attn: Auction Rate Securities
Telephone: (212) 250-6850
Facsimile: (212) 250-6215
If to the Market Agent,
addressed: Salomon Smith Barney Inc.
388 Greenwich Street
32nd Floor
New York, New York 10013
Attn: Student Loan Finance Group
Telephone: (212) 816-9948
Facsimile: (212) 816-0598
or such other address, telephone or facsimile number as such party may
hereafter specify for such purpose by notice in writing to the other parties.
Each such notice, request or communication shall be effective when delivered at
the address specified herein. Communications shall be given on behalf of the
Trustee by an Authorized Trustee Representative, on behalf of the Auction Agent
by an Authorized Auction Agent Officer and on behalf of the Issuer by an
Authorized Issuer Officer.
7.3 Entire Agreement. This Auction Agent Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there
are no other representations, endorsements, promises, agreements or
understandings, oral, written or inferred, between the parties relating to the
subject matter hereof.
7.4 Benefits. Nothing herein, express or implied, shall give to any person,
other than the Trustee, acting on behalf of the beneficial owners of the Series
1999-1 Notes, the Auction Agent, the Issuer and their respective successors and
assigns, any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) This Auction Agent Agreement shall not be deemed or construed to
be modified, amended, rescinded, canceled or waived, in whole or in part,
except by a written instrument signed by duly authorized representatives of
the parties hereto.
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(b) The Trustee and the Issuer shall not enter into or approve any
amendment of or supplement to the First Supplemental Indenture which
materially affects the Auction Agent's duties or obligations under the
First Supplemental Indenture without obtaining the prior written consent of
the Auction Agent. The Trustee shall promptly notify the Auction Agent of
any amendment of or supplement to the First Supplemental Indenture, and
shall provide a copy thereof to the Auction Agent upon request.
(c) Failure of a party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any
subsequent breach.
7.6 Successors and Assigns. This Auction Agent Agreement shall be binding
upon, inure to the benefit of and be enforceable by the respective successors
and assigns of each of the Trustee, the Issuer and the Auction Agent. This
Auction Agent Agreement may not be assigned by any party hereto absent the prior
written consent of the other parties hereto, which consents shall not be
unreasonably withheld.
7.7 Severability. If any clause, provision or section hereof shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts. This Auction Agent Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
EDUCATION LOANS INCORPORATED,
as Issuer
By: /s/ A. Norgrin Sanderson
------------------------
Title: President
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ Thomas W. Steele
------------------------
Title: Trust Officer
BANKERS TRUST COMPANY, as
Auction Agent
By: /s/ Jody Sanchez
--------------------------
Title: Associate
-----------------------
-19-
<PAGE>
EXHIBIT A-1
TO AUCTION AGENT AGREEMENT
LIST OF INITIAL BROKER-DEALERS WITH RESPECT TO THE SERIES 1999-1A AND C
NOTES
Salomon Smith Barney Inc.
A-1-1
<PAGE>
EXHIBIT A-2
TO AUCTION AGENT AGREEMENT
LIST OF INITIAL BROKER-DEALERS WITH RESPECT TO THE SERIES 1999-1B NOTES
Banc of America Securities LLC
A-2-1
<PAGE>
EXHIBIT B
TO AUCTION AGENT AGREEMENT
BROKER-DEALER AGREEMENT
B-1
<PAGE>
EXHIBIT C
TO AUCTION AGENT AGREEMENT
NOTICE OF RATINGS
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1999-1A AND B
SUBORDINATE SERIES 1999-1C
NOTICE IS HEREBY GIVEN to the Auction Agent by the Issuer pursuant to
Section 2.3(a) of the Auction Agent Agreement that:
1. as of the date of this notice the rating by Moody's on the captioned
Senior Series 1999-1 Notes is ______ [and such rating is [*"Aa3" or
higher/lower than "Aa3"]]**;
2. as of the date of this notice the rating by Fitch on the captioned
Senior Series 1999-1 Notes is _____ [and such rating is [*"AA-" or
higher] [lower than "AA-"]]**;
3. as of the date of this notice the rating by Moody's on the captioned
Subordinate Series 1999-1 Notes is ______ [and such rating is [*"______"
or higher/lower than "_________"]]**; and
4. as of the date of this notice the rating by Fitch on the captioned
Subordinate Series 1999-1 Notes is _____ [and such rating is [*"_______"
or higher] [lower than "________"]]**.
The Auction Agent may rely on such ratings for all purposes of the First
Supplemental Indenture, including determination of the Maximum Auction Rate
thereunder, from the date hereof until further notice from the undersigned
Education Loans Incorporated.
EDUCATION LOANS INCORPORATED
By: ______________________
Title: ___________________
Date: ___________________
* Choose one.
** The information in the outer brackets will be used as applicable whenever the
Moody's rating is not equal to "Aa3" and/or the Fitch rating is not equal to
to "AA-."
C-1
<PAGE>
EXHIBIT D
TO AUCTION AGENT AGREEMENT
NOTICE OF SERIES 1999-1 NOTES OUTSTANDING
EDUCATION LOANS INCORPORATED
STUDENT LOAN
ASSET-BACKED NOTES
SENIOR SERIES 1999-1A[B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that $_________ aggregate principal amount of Series
1999-A[B][C] Notes were outstanding at the close of business on the immediately
preceding Regular Record Date. Such aggregate principal amount of Series
1999-A[B][C] Notes, less $_________ aggregate principal amount of Series
1999-A[B][C] Notes to be redeemed by the Issuer pursuant to the First
Supplemental Indenture, for a net aggregate principal amount of Series
1999-A[B][C] Notes of $______________, will be available on the next Auction
scheduled to be held on _______________.
Terms used herein have the meanings set forth in the First Supplemental
Indenture relating to the above-referenced issue.
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By: _____________________
Title: ___________________
Date: ___________________
D-1
<PAGE>
EXHIBIT E
TO AUCTION AGENT AGREEMENT
NOTICE OF FEE RATE CHANGE
EDUCATION LOANS INCORPORATED
STUDENT LOAN
ASSET-BACKED NOTES
SENIOR SERIES 1999-1A AND [B]
SUBORDINATE SERIES 1999-1C
NOTICE IS HEREBY GIVEN that the [Auction Agent Fee Rate] [Broker-Dealer Fee
Rate with respect to the Series 1999-1__Notes] has been changed in accordance
with Section [6.4(b)] [6.5(b)] of the Auction Agent Agreement. The new [Auction
Agent Fee Rate] [Broker-Dealer Fee Rate with respect to the Series
1999-1__Notes] shall be ______% per annum.
Terms used herein have the meanings set forth in the First Supplemental
Indenture relating to the above-referenced issue.
BANKERS TRUST COMPANY, as
Auction Agent
By: _____________________
Title: ___________________
Date: ___________________
APPROVED:
EDUCATION LOANS INCORPORATED
By: _____________________
Title: ___________________
Date: ___________________
E-1
<PAGE>
EXHIBIT F
TO AUCTION AGENT AGREEMENT
NOTICE OF A PAYMENT DEFAULT
EDUCATION LOANS INCORPORATED
STUDENT LOAN
ASSET-BACKED NOTES
SENIOR SERIES 1999-1A[B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and not been
cured with respect to the Series 1999-1__Notes. Determination of the Series
1999-1 Note Interest Rate on the Series 1999-1 Notes pursuant to the Auction
Procedures will be suspended. The Series 1999-1 Note Interest Rate on each
series of the Series 1999-1 Notes for each Auction Period commencing after the
date of Payment Default will equal the Non-Payment Rate (as to each such series
with respect to which a Payment Default exists) or the Net Loan Rate (as to all
other series), as the case may be, as it is determined by the Trustee on the
first day of such Auction Period.
Terms used herein have the meanings set forth in the First Supplemental
Indenture relating to the above-referenced issue.
BANKERS TRUST COMPANY, as
Auction Agent
By: _____________________
Title: ___________________
Date: ___________________
F-1
<PAGE>
EXHIBIT G
TO AUCTION AGENT AGREEMENT
SETTLEMENT PROCEDURES
If not otherwise defined below, capitalized terms used herein shall have
the meanings given such terms in the First Supplemental Indenture. These
Settlement Procedures apply separately to each series of Series 1999-1 Notes.
(a) Not later than (1) 3:00 p.m., if the Series 1999-1 Note Interest
Rate is the Auction Rate, or (2) 4:00 p.m., if the Series 1999-1 Note
Interest Rate is the Net Loan Rate, on each Auction Date, the Auction Agent
shall notify by telephone each Broker- Dealer that participated in the
Auction held on such Auction Date and submitted an Order on behalf of an
Existing Holder or Potential Holder of:
(i) the Series 1999-1 Note Interest Rate fixed for the next
Interest Period;
(ii) whether there were Sufficient Bids in such Auction;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer")
submitted Bids or Sell Orders on behalf of an Existing Holder, whether
such Bid or Sell Order was accepted or rejected, in whole or in part,
and the principal amount of Series 1999- 1 Notes, if any, to be sold
by such Existing Holder;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Holder, whether such Bid was accepted
or rejected, in whole or in part, and the principal amount of Series
1999-1 Notes, if any, to be purchased by such Potential Holder;
(v) If the aggregate principal amount of Series 1999-1 Notes to
be sold by all Existing Holders on whose behalf such Seller's
Broker-Dealer submitted Bids or Sell Orders exceeds the aggregate
principal amount of Series 1999-1 Notes to be purchased by all
Potential Holders on whose behalf such Buyer's Broker- Dealer
submitted a Bid, the name or names of one or more Buyer's Broker-
Dealers (and the name of the Participant, if any, of each such Buyer's
Broker- Dealer) acting for one or more purchasers of such excess
principal amount of Series 1999-1 Notes and the principal amount of
Series 1999-1 Notes to be purchased from one or more Existing Holders
on whose behalf such Seller's Broker-Dealer acted by one or more
Potential Holders on whose behalf each of such Buyer's Broker-Dealers
acted;
(vi) if the aggregate principal amount of Series 1999-1 Notes to
be purchased by all Potential Holders on whose behalf such Buyer's
Broker-Dealer submitted a Bid exceeds the aggregate principal amount
of Series 1999-1 Notes to
G-1
<PAGE>
be sold by all Existing Holders on whose behalf such Seller's
Broker-Dealer submitted a Bid or a Sell Order, the name or names of
one or more Seller's Broker-Dealers (and the name of the Participant,
if any, of each such Seller's Broker-Dealer) acting for one or more
sellers of such excess principal amount of Series 1999-1 Notes and the
principal amount of Series 1999-1 Notes to be sold to one or more
Potential Holders on whose behalf such Buyer's Broker-Dealer acted by
one or more Existing Holders on whose behalf each of such Seller's
Broker- Dealers acted; and
(vii) the Auction Date for the next succeeding Auction.
(b) On each Auction Date, each Broker-Dealer that submitted an Order
on behalf of any Existing Holder or Potential Holder shall:
(i) advise each Existing Holder and Potential Holder on whose
behalf such Broker-Dealer submitted a Bid or Sell Order in the Auction
on such Auction Date whether such Bid or Sell Order was accepted or
rejected, in whole or in part;
(ii) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, advise each Potential Holder on whose behalf such
Buyer's Broker-Dealer submitted a Bid that was accepted, in whole or
in part, to instruct such Potential Holder's Participant to pay such
Buyer's Broker-Dealer (or its Participant) through the Securities
Depository the amount necessary to purchase the principal amount of
Series 1999-1 Notes to be purchased pursuant to such Bid against
receipt of such Series 1999-1 Notes;
(iii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Existing Holder on whose behalf such
Seller's Broker-Dealer submitted a Sell Order that was accepted, in
whole or in part, or a Bid that was accepted, in whole or in part, to
instruct such Existing Holder's Participant to deliver to such
Seller's Broker-Dealer (or its Participant) through the Securities
Depository the principal amount of Series 1999-1 Notes to be sold
pursuant to such Order against payment therefor;
(iv) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order and each Potential Holder on whose
behalf such Broker- Dealer submitted a Bid of the Auction Rate for the
next Interest Period;
(v) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order of the next Auction Date; and
(vi) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part,
of the next Auction Date.
(c) On the basis of the information provided to it pursuant to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order
in an Auction is required to
G-2
<PAGE>
allocate any funds received by it in connection with such Auction
pursuant to paragraph (b)(ii) above, and any Series 1999-1 Notes received
by it in connection with such Auction pursuant to paragraph (b)(iii) above
among the Potential Holders, if any, on whose behalf such Broker-Dealer
submitted Bids, the Existing Holders, if any, on whose behalf such
Broker-Dealer submitted Bids or Sell Orders in such Auction, and any
Broker-Dealers identified to it by the Auction Agent following such Auction
pursuant to paragraph (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Holder and Existing Holder with an Order in
the Auction on such Auction Date shall instruct its Participant as
provided in paragraph (b)(ii) or (b)(iii) above, as the case may be;
(ii) each Seller's Broker-Dealer that is not a Participant of the
Securities Depository shall instruct its Participant to deliver such
Series 1999-1 Notes through the Securities Depository to a Buyer's
Broker-Dealer (or its Participant) identified to such Seller's
Broker-Dealer pursuant to paragraph (a)(v) above against payment
therefor; and
(iii) each Buyer's Broker-Dealer that is not a Participant in the
Securities Depository shall instruct its Participant to pay through
the Securities Depository to Seller's Broker-Dealer (or its
Participant) identified following such Auction pursuant to (a)(vi)
above in the amount necessary to purchase Series 1999-1 Notes to be
purchased pursuant to paragraph (b)(ii) above against receipt of such
Series 1999-1 Notes.
(e) On the Business Date following each Auction Date:
(i) each Participant for a Bidder in the Auction on such Auction
Date referred to in paragraph (d)(i) above shall instruct the
Securities Depository to execute the transactions described under
paragraph (b)(ii) or (b)(iii) above for such Auction, and the
Securities Depository shall execute such transactions;
(ii) each Seller's Broker-Dealer or its Participant shall
instruct the Securities Depository to execute the transactions
described in paragraph (d)(ii) above for such Auction, and the
Securities Depository shall execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Participant shall
instruct the Securities Depository to execute the transactions
described in paragraph (d)(iii) above for such Auction, and the
Securities Depository shall execute such transactions.
(f) If an Existing Holder selling Series 1999-1 Notes in an Auction
fails to deliver such Series 1999-1 Notes (by authorized book-entry), a
Broker-Dealer may deliver to the
G-3
<PAGE>
Potential Holder on behalf of which it submitted a Bid that was
accepted a principal amount of Series 1999-1 Notes that is less than the
principal amount of Series 1999-1 Notes that otherwise was to be purchased
by such Potential Holder. In such event, the principal amount of Series
1999-1 Notes to be so delivered shall be determined solely by such
Broker-Dealer (but only in Authorized Denominations). Delivery of such
lesser principal amount of Series 1999-1 Notes shall constitute good
delivery. Notwithstanding the foregoing terms of this paragraph (f), any
delivery or nondelivery of Series 1999-1 Notes which shall represent any
departure from the results of an Auction, as determined by the Auction
Agent, shall be of no effect unless and until the Auction Agent shall have
been notified of such delivery or nondelivery in accordance with the
provisions of the Auction Agent Agreement and the Broker-Dealer Agreements.
Neither the Trustee nor the Auction Agent will have any responsibility or
liability with respect to the failure of a Potential Holder, Existing
Holder or their respective Broker-Dealer or Participant to take delivery of
or deliver, as the case may be, the principal amount of Series 1999-1 Notes
purchased or sold pursuant to an Auction or otherwise.
G-4
<PAGE>
EXHIBIT H
TO AUCTION AGENT AGREEMENT
NOTICE OF CONTINUATION OF AUCTION PERIOD
EDUCATION LOANS INCORPORATED
STUDENT LOAN
ASSET-BACKED NOTES
SENIOR SERIES 1999-1A[B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that a condition for the establishment of a change
in the length of one or more Auction Periods for the captioned Series 1999-1
Notes has not been met. An Auction will therefor be held on the next Auction
Date (___________________) and the length of such Auction Period shall remain an
Auction Period of _______ days.
BANKERS TRUST COMPANY, as
Auction Agent
By: _____________________
Title: ___________________
Date: ___________________
H-1
<PAGE>
EXHIBIT I
TO AUCTION AGENT AGREEMENT
NOTICE OF SERIES 1999-1 NOTE INTEREST RATE
EDUCATION LOANS INCORPORATED
STUDENT LOAN
ASSET-BACKED NOTES
SENIOR SERIES 1999-1A[B]
[SUBORDINATE SERIES 1999-1C]
NOTICE IS HEREBY GIVEN that [the Corporation Certificate and the Trustee
written statements, if any,] [Sufficient Bids] necessary for the establishment
of a change in the length of one or more Auction Periods for the captioned
Series 1999-1 Notes have not been provided. The Series 1999-1 Note Interest Rate
for the Auction Period commencing on ______________ shall be the [Maximum
Auction Rate] [Net Loan Rate] and such Auction Period shall remain an Auction
Period of _____ days.
BANKERS TRUST COMPANY, as
Auction Agent
By: _____________________
Title: ___________________
Date: ___________________
I-1
<PAGE>
Exhibit 10.1
================================================================================
SERVICING AND ADMINISTRATION AGREEMENT
among
EDUCATION LOANS INCORPORATED,
as Issuer
STUDENT LOAN FINANCE CORPORATION,
as Servicer and Administrator
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
____________________________
Dated as of December 1, 1999
____________________________
================================================================================
<PAGE>
SERVICING AND ADMINISTRATION AGREEMENT
THIS SERVICING AND ADMINISTRATION AGREEMENT (the "Agreement") entered into
as of the 1st day of December, 1999 by and among Student Loan Finance
Corporation, a corporation organized under the laws of the State of South Dakota
("SLFC," and, in its capacity as servicer hereunder, the "Servicer,"and, in its
capacity as administrator hereunder, the "Administrator"), Education Loans
Incorporated, a corporation organized under the laws of the State of Delaware
(the "Issuer"), and U.S. Bank National Association, a national banking
association headquartered in Minneapolis, Minnesota, in its capacity as trustee
under the Indenture hereinafter referred to (the "Trustee").
W I T N E S E T H:
WHEREAS, the Servicer services student loans ("Student Loans") which have
been (1) guaranteed under a guaranty program established by a state or a private
nonprofit corporation pursuant to the requirements of the Higher Education Act
of 1965, as amended from time to time, and the rules and regulations promulgated
thereunder (the "Higher Education Act")(such Student Loans being herein referred
to as "FFELP Loans"), or (2) have been originated under certain loan programs
(the "Alternative Loan Programs") established by SLFC to make amounts available
for the post-secondary education of eligible students in excess of the amounts
available through FFELP Loans (such Student Loans being herein referred to as
"Alternative Loans"); and
WHEREAS, SLFC has established its Student Loan Purchase Program pursuant to
which it acquires or causes the acquisition of certain Student Loans from
lenders ("Lenders") eligible to originate or hold such Student Loans under the
Higher Education Act or under an Alternative Loan Program, as applicable; and
WHEREAS, pursuant to SLFC's Student Loan Purchase Program, the Issuer has
entered into or will enter into Student Loan Purchase Agreements ("Issuer
Student Loan Purchase Agreements") (1) with certain Lenders pursuant to which
the Issuer agrees to cause the purchase of FFELP Loans by the Trustee (for the
account and on behalf of the Issuer) from such Lenders, and (2) with SLFC
pursuant to which the Issuer has agreed to cause the purchase of Alternative
Loans by the Trustee (for the account and on behalf of the Issuer) from SLFC;
and
WHEREAS, pursuant to SLFC's Student Loan Purchase Program, GOAL Funding,
Inc., a Delaware corporation ("GOAL Funding"), has entered into or will enter
into Student Loan Purchase Agreements ("GOAL Funding Student Loan Purchase
Agreements" and, together with the Issuer Student Loan Purchase Agreements,
collectively the " Student Loan Purchase Agreements") (1) with certain Lenders
pursuant to which GOAL Funding agrees to cause the purchase of FFELP Loans by
U.S. Bank National Association, as trustee for GOAL Funding (in such capacity,
the "GOAL Funding Trustee") (for the account and on behalf of GOAL Funding) from
such Lenders, and (2) with SLFC pursuant to which GOAL Funding has agreed to
cause the purchase of Alternative Loans by the GOAL Funding Trustee (for the
account and on behalf of GOAL Funding) from SLFC; and
<PAGE>
WHEREAS, SLFC, as servicer and administrator (in such capacities, the "GOAL
Funding Servicer"), has, pursuant to a servicing and administration agreement
with GOAL Funding and the GOAL Funding Trustee (the "GOAL Funding Servicing
Agreement"), agreed to service the Student Loans originated on behalf of GOAL
Funding or purchased by GOAL Funding under the GOAL Funding Student Loan
Purchase Agreements while such Student Loans are pledged under GOAL Funding's
warehouse financing; and
WHEREAS, the Issuer will enter into Transfer Agreements ("Transfer
Agreements") with the Trustee, GOAL Funding and the GOAL Funding Trustee,
pursuant to which the Issuer will purchase from GOAL Funding FFELP Loans and
Alternative Loans previously originated on behalf of GOAL Funding or purchased
pursuant to GOAL Funding Student Loan Purchase Agreements ("GOAL Funding Student
Loans") and will be assigned all right, title and interest of GOAL Funding in
such agreements with respect to the Student Loans so sold; and
WHEREAS, under certain circumstances, the Issuer also will cause the
origination of Student Loans by the Trustee (for the account and on behalf of
the Issuer) (Student Loans purchased or originated under the Indenture
hereinafter described are herein referred to as "Financed Student Loans"); and
WHEREAS, the Issuer initially will obtain funds necessary to originate and
purchase Student Loans through the issuance, pursuant to an Indenture of Trust,
dated as of December 1, 1999 (as amended or supplemented, the "Indenture"),
between the Issuer and the Trustee, as Trustee, of its Student Loan Asset-Backed
Notes, Senior Series 1999-1A and B and Subordinate Series 1999-1C (the "Series
1999-1 Notes," and, together with any additional notes issued under the
Indenture, the "Notes"); and
WHEREAS, the principal of and interest on the Notes is to be paid from
repayment of Financed Student Loans and other trust assets pledged under the
Indenture; and
WHEREAS, the Issuer wishes to provide for the origination, acquisition and
servicing of the Financed Student Loans in the manner provided in the Student
Loan Purchase Agreements and the Indenture; and
WHEREAS, copies of (i) the executed Student Loan Purchase Agreements, (ii)
the executed Transfer Agreements and (iii) the Indenture have been or will be
furnished to the Servicer; and
WHEREAS, the Issuer wishes to retain the Servicer to provide services in
connection with the origination, acquisition, servicing and collection of the
Financed Student Loans in accordance with the requirements of the Higher
Education Act, the Guarantee Program, the Alternative Loan Programs, the Student
Loan Purchase Agreements, the Transfer Agreements and the Indenture, and the
Servicer is willing to undertake such obligations on the terms hereinafter
specified; and
-2-
<PAGE>
WHEREAS, the Issuer wishes to retain the Administrator to perform other
administrative requirements on behalf of the Issuer, including those required to
allow the Issuer to satisfy certain requirements under the Indenture;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Term. The term of this Agreement shall commence as of the date hereof
----
and shall continue for so long as any of the Notes shall remain Outstanding,
unless this Agreement is terminated in accordance with the terms hereof.
2. Definitions. In addition to terms elsewhere defined in this
-----------
Agreement, and except as otherwise provided herein or as the context may
otherwise require or suggest, initially capitalized terms used herein shall have
the meanings assigned thereto in the Indenture, or if not defined therein, in
the Student Loan Purchase Agreements.
3. Agreement to Provide Services with respect to Financed Student Loans;
---------------------------------------------------------------------
Cooperation.
- -----------
a. The Servicer shall provide services to the Issuer in connection
with the origination and acquisition of Student Loans to be
Financed in accordance with this Agreement. The Servicer shall
commence servicing the Financed Student Loans as of the day they
are Financed and shall service the Financed Student Loans in
accordance with this Agreement. The Servicer may perform all or
part of its origination, acquisition, and servicing activities
hereunder through a subcontractor. The Servicer shall perform or
shall cause its subcontractor to perform all services hereunder in
compliance with the Higher Education Act, applicable requirements
of each Guarantee Agency and each Alternative Loan Program and all
other applicable federal, state and local laws and regulations. The
Servicer shall be responsible for the performance of its
obligations hereunder, whether such obligations are performed by
the Servicer or by its subcontractor, and the Servicer shall be
responsible for any fees and payments required by the
subcontractor. A subcontractor shall agree to reasonable audits,
examinations and inspections with respect to the performance of its
activities on behalf of the Servicer. The Servicer shall provide
the Issuer and the Trustee with prior written notice of any
subcontractor relationship (other than the existing relationships
with AFSA Data Corporation and Great Lakes Higher Education
Servicing Corporation). No such subcontractor relationship (other
than the existing relationships with AFSA Data Corporation and
Great Lakes Higher Education Servicing Corporation) shall be
entered into unless the Trustee has received written confirmation
from each Rating Agency that such relationship will not result in
the reduction or withdrawal of the rating on any Note.
-3-
<PAGE>
b. The Issuer and the Trustee shall, in accordance with the provisions
of the Indenture, cooperate with the Servicer in delivering or
causing to be delivered Financed Student Loans to the Servicer for
origination, acquisition and servicing in accordance with this
Agreement.
4. Acquisition Process. The Issuer, the Trustee and the Servicer agree
-------------------
that:
a. Unless and until otherwise directed in writing by the Issuer, the
Servicer shall provide to the Trustee all certificates and
directions required to be delivered by the Issuer to the Trustee
under the Indenture in connection with the Financing through
acquisition of Eligible Loans and Student Loans thereunder.
b. (1) Pursuant to the Issuer Student Loan Purchase Agreements, the
Servicer will, on behalf of the Issuer and the Trustee, require
that each Lender (in the case of FFELP Loans) or SLFC (in the case
of Alternative Loans) transfer to the Servicer or the Servicer's
bailee (or, in the case of the promissory notes relating to
Alternative Loans, to the Trustee or a custodian designated by the
Trustee), on or before each applicable Loan Purchase Date, physical
custody and possession of documentation and information relating to
Student Loans scheduled to be sold to the Trustee on behalf of the
Issuer on each such Loan Purchase Date. Such documentation and
information so transferred will include (i) the documents described
in Exhibit A (in the case of Issuer Student Loan Purchase
Agreements relating to Alternative Loans) or Exhibit B (in the case
of Issuer Student Loan Purchase Agreements relating to FFELP Loans)
attached to the Issuer Student Loan Purchase Agreements (the "Loan
Documents"), and (ii) such additional documentation or information
relating to the Student Loans as the Servicer shall reasonably
require for the purpose of allowing the Student Loans to be
properly serviced by the Servicer.
(2) Pursuant to the Transfer Agreements, the Servicer will, on
behalf of the Issuer and the Trustee, require that GOAL Funding
transfer, or cause to be transferred, to the Servicer or the
Servicer's bailee (or, in the case of the promissory notes relating
to Alternative Loans, to the Trustee or a custodian designated by
the Trustee), on or before each applicable Loan Purchase Date
(which term, as used in this Agreement with respect to the purchase
of Financed GOAL Funding Student Loans, means the date of purchase
of such loans under the applicable Transfer Agreement), physical
custody and possession of documentation and information relating to
Student Loans scheduled to be sold to the Trustee on behalf of the
Issuer on each such Loan Purchase Date. Such documentation and
information so transferred will include (i) the documents described
in Exhibit A (in the case of GOAL Funding Student Loan Purchase
Agreements relating to Alternative Loans)
-4-
<PAGE>
or Exhibit B (in the case of GOAL Funding Student Loan Purchase
Agreements relating to FFELP Loans) attached to the GOAL Funding
Student Loan Purchase Agreements (the "Loan Documents"), and (ii)
such additional documentation or information relating to the
Student Loans as the Servicer shall reasonably require for the
purpose of allowing the Student Loans to be properly serviced by
the Servicer.
c. Within a reasonable period after delivery to the Servicer (but in
no event longer than 10 Business Days unless otherwise expressly
agreed) of the documentation and information relating to the
Student Loans identified in Section 4(b) above, the Servicer shall
(i) establish and maintain all records delivered to the Servicer
with respect to each Financed Student Loan, and complete records of
the Servicer's servicing of the Financed Student Loan from the date
such servicing commenced, (ii) maintain possession of the loan
documents described in Section 6(p) and (r) hereof that it receives
as required hereunder, and (iii) image, microfilm or otherwise
reproduce such documents and cause such reproductions to be stored
at a separate location.
d. In the course of establishing the records relating to each Financed
Student Loan as described in Section 4(c) hereof, the Servicer
shall make note of any item which comes to the attention of the
Servicer during the establishment process (it being understood that
the Servicer will not be conducting a complete file and note
examination of each Student Loan to be Financed) which would make
it appear that any Student Loan has not been properly originated,
disbursed and documented or has not had due diligence exercised
with respect thereto, in the origination, disbursement,
administration, servicing and collection thereof, in accordance
with the requirements of the Higher Education Act, the Guarantee
Program or Alternative Loan Program, as appropriate, and the
applicable Student Loan Purchase Agreement. The Servicer shall give
Lenders (in the case of FFELP Loans) or SLFC (in the case of
Alternative Loans), as appropriate, a reasonable opportunity (but
in no event longer than 30 days or such greater period of time as
the Trustee shall consent to in writing) to correct any exceptions
or problems identified by the Servicer and to provide such
documentation and information to the Servicer as shall be necessary
to correct such exceptions or problems. Except as otherwise
permitted under the Indenture, if such exceptions or problems are
not corrected, the Servicer shall return to the Lenders (in the
case of FFELP Loans) or SLFC (in the case of Alternative Loans), as
appropriate, in accordance with procedures and under the conditions
specified in the sections of the Student Loan Purchase Agreements
relating to the rejection or repurchase of Student Loans, any
documents and information related to Student Loans which have
exceptions or problems resulting in such loans not being Eligible
Loans.
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<PAGE>
e. The Servicer shall (i) establish a course of communication with
each Lender (in the case of FFELP Loans), SLFC (in the case of
Alternative Loans) and the GOAL Funding Servicer (in the case of
Financed GOAL Funding Student Loans) sufficient to ensure that the
Servicer receives notice from each Lender, SLFC and the GOAL
Funding Servicer of all transactions with respect to each Student
Loan prior to the required time of delivery by the Servicer to the
Trustee of the documents required by Section 4(a) hereof, and (ii)
load all information necessary for servicing Financed Student Loans
into its servicing system so that servicing and collection of
Financed Student Loans on the basis of "simple interest" can
commence as of the Loan Purchase Date or purchase date as required
by Section 3 hereof. If interest has been collected on any Student
Loan to be purchased by the Trustee (for the account and on behalf
of the Issuer) on the basis of the "rule of 78's," the Servicer
shall cause the Lender (in the case of FFELP Loans), SLFC (in the
case of Alternative Loans) or GOAL Funding or the GOAL Funding
Servicer (in the case of Financed GOAL Funding Student Loans)
wishing to sell such loan to convert the remaining repayment
schedule for each such Student Loan so that it may be collected on
the basis of "simple interest."
f. The Issuer and the Trustee shall promptly after each Loan Purchase
Date, upon request by the Servicer, provide to the Servicer any
additional documentation or information related to the Financed
Student Loans which either of them may have in their possession or
may reasonably be able to obtain.
g. The Servicer shall, promptly after each Loan Purchase Date, notify
the Borrower under each Financed Student Loan purchased on such
Loan Purchase Date of the assignment and transfer to the Trustee
(for the account and on behalf of the Issuer) of the Lender's (in
the case of FFELP Loans), SLFC's (in the case of Alternative Loans)
or GOAL Funding's (in the case of Financed GOAL Funding Student
Loans) interest in each such Financed Student Loan and shall direct
each such Borrower thereafter to make all payments on such Financed
Student Loan directly to the Servicer until otherwise notified by
the Trustee. If a Financed Student Loan has been converted from
repayment under the rule of 78's to repayment under the simple
interest method, as required by Section 4(e) hereof, the Lender (in
the case of FFELP Loans), SLFC (in the case of Alternative Loans)
or GOAL Funding or the GOAL Funding Servicer (in the case of
Financed GOAL Funding Student Loans) shall notify the Borrower and
shall obtain the written consent of the Borrower and take whatever
additional action may be necessary to effect such conversion of
repayment method in accordance with applicable legal requirements.
Each Borrower notification shall include any information required
to be included by the Higher Education Act and the
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<PAGE>
requirements of the Guarantee Agency or Alternative Loan Program,
as appropriate.
h. The assignment of each Financed FFELP Loan to the Trustee (for the
account and on behalf of the Issuer) shall be reported by the
Servicer promptly after each applicable Loan Purchase Date to the
Secretary of Education and/or the Guarantee Agency, as appropriate,
and the Trustee, by a properly completed Loan Transfer Report in
the form required by the Secretary of Education and/or the
Guarantee Agency.
i. If the Servicer at any time becomes aware of an event which would
(i) allow the Issuer to reject a Student Loan under the applicable
Student Loan Purchase Agreement, or (ii) allow the Issuer to
require a Lender (in the case of FFELP Loans) or SLFC (in the case
of Alternative Loans) to repurchase a Financed Eligible Loan or
Financed Student Loan or to substitute an Eligible Loan under the
applicable Student Loan Purchase Agreement, then the Servicer shall
so notify the Issuer. If the Servicer or the Issuer determine that
such a Student Loan should be rejected or repurchased, the Trustee
shall take such action as shall be necessary to allow the Issuer
and the Trustee to enforce their respective rights under the
applicable Student Loan Purchase Agreement.
5. Origination Process. The Issuer, the Trustee and the Servicer agree
-------------------
that:
a. Unless and until otherwise directed in writing by the Issuer, the
Servicer shall provide to the Trustee all certificates and
directions required to be delivered by the Issuer to the Trustee
under the Indenture in connection with the Financing through
origination of Eligible Loans and Student Loans thereunder.
b. The Servicer shall provide disbursement and origination services in
connection with the origination and disbursement of Eligible Loans
under the Indenture. The Servicer shall perform all services and
duties customary to the origination and disbursement of Student
Loans in accordance with generally accepted industry standards and
practices and in compliance with the Higher Education Act,
applicable requirements of the Guarantor and each Alternative Loan
Program and all other applicable federal, state and local laws and
regulations.
6. Servicing. The Servicer agrees that each of the Financed Student
---------
Loans, while held under the Indenture, shall be serviced by it in accordance
with the procedures established in the Higher Education Act, the Guarantee
Program regulations and, where applicable, each Alternative
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<PAGE>
Loan Program. Additionally, the Servicer shall perform at least the following
minimum duties, obligations and functions in connection with its servicing of
such Financed Student Loans:
a. Maintain a complete and separate file concerning each Financed
Student Loan, which file (i) shall include, without limitation, the
Loan Documents, and at least the following information relating to
each of the Financed Student Loans: name and social security number
of Eligible Borrower, actual or estimated graduation date of the
student, payment status, days delinquent, number of payments made,
next payment due date, date of last payment received, total amount
disbursed, beginning of deferments and forbearances, and ending of
deferments and forbearances; and (ii) shall be maintained in a
manner sufficient to allow separate identification of the Financed
Student Loans securing the Notes from other loans serviced or owned
by the Servicer (including those owned by or on behalf of the
Issuer).
b. Take all steps necessary to maintain the Guarantee coverage on each
Financed FFELP Loan in full force and effect at all times.
c. Exercise reasonable discretion in approving borrower requests for
forbearance (as permitted under the Higher Education Act and the
Guarantee Program regulations or the applicable Alternative Loan
Program, as appropriate) where such approval will not adversely
affect the financial viability of the Issuer and will not violate
the covenants set forth in the Indenture.
d. Exercise due diligence (within the meaning of the Higher Education
Act, the Guarantee Program regulations and the Alternative Loan
Programs) in the servicing, administration and collection of all
Financed Student Loans.
e. Attempt to collect or cause to be collected all payment of
principal and interest, Special Allowance Payments, and Guarantee
payments with respect to each Financed Student Loan and, with
respect thereto, (A) (i) cause all interest subsidy payments and
Special Allowance Payments to be forwarded by the Secretary of
Education directly to the Trustee for immediate deposit into the
appropriate Fund or Account under the Indenture and (ii) deposit
all other such payments immediately upon receipt into a lock-box
account (which shall be part of the Revenue Fund) to be established
by the Trustee in the name of and for the account of the Trustee
under circumstances which provide for investment of such payments
in accordance with the requirements of the Indenture applicable to
moneys on deposit in the Revenue Fund. Upon submission by the
Servicer to the Secretary of Education of a billing for interest
subsidy payments or Special Allowance Payments, the Servicer shall,
upon request, provide to the Trustee and the Issuer a written
statement
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<PAGE>
indicating (a) the amount billed for interest subsidy payments and
(b) the principal amount in each Special Allowance Payment category
for which the billing is submitted, for use by the Trustee and the
Issuer in verifying amounts billed for and received with respect
thereto from the Secretary of Education. In the event of
discrepancies or disputes with the Secretary of Education, the
Servicer shall be responsible for representing the interests of the
Issuer and the Trustee in effecting a settlement with the Secretary
of Education of such discrepancies or disputes. The Servicer shall
direct the transfer from time to time of the balances in the lock-
box account to the Trustee for deposit in the appropriate Fund or
Account under the Indenture; provided, however, that the balances
in the lock-box account as of the last day of any calendar month
shall, at a minimum, be transferred on or before the 12th day of
the next succeeding month (or the next preceding Business Day if
such 12th day is not a Business Day), to the Trustee for deposit in
the appropriate Fund or Account under the Indenture. On or before
the date of any transfer, the Servicer shall deliver by facsimile,
hand or mail by U.S. express mail (or other substantially
equivalent means acceptable to the Trustee) a statement to the
Trustee indicating the portion of the payments transferred on such
date which represents (x) principal payments from any source with
respect to Financed Student Loans, and (y) interest payments from
any source with respect to Financed Student Loans.
f. Retain summary records of all contacts, follow-ups and collection
efforts (showing at least the date and subject of each
communication with the Borrower or endorser for collection of each
delinquent Financed Student Loan) and records of all correspondence
(including, without limitation, changes for which records are
required to be maintained by the Higher Education Act, the
Guarantee Program regulations and, where applicable, each
Alternative Loan Program) relating to each Financed Student Loan.
g. Prepare and maintain all appropriate accounting records with
respect to all transactions related to each Financed Student Loan,
including, but not limited to, accounting for all payments of
principal, interest, and Guarantee payments with respect to each
Financed Student Loan and Special Allowance Payments relating to
all Financed FFELP Loans.
h. Handle the processing of all adjustments including, without
limitation, forbearances, reinstatements, deferments, refunds and
loans paid in full.
i. Handle the processing of all address changes and the updating of
the address records accordingly.
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<PAGE>
j. In the case of defaulted Financed FFELP Loans, take all steps
necessary to file and prove a claim for loss with the Secretary
of Education or the Guarantee Agency, as the case may be and as
required, and assume responsibility for all necessary
communication and contact with the Secretary of Education or the
Guarantee Agency, as the case may be and as required, to recover
on such defaulted Financed FFELP Loans within the time required
by the Higher Education Act and the requirements of the Guarantee
Agency. In the case of defaulted Financed Alternative Loans, take
all steps necessary to recover on such defaulted Financed
Alternatives Loans in accordance with the requirements of the
applicable Alternative Loan Program.
k. In the case of a claim for loss being denied by the Secretary of
Education or the Guarantee Agency, as the case may be, under
circumstances resulting in a Lender being required by a Student
Loan Purchase Agreement to repurchase a Financed FFELP Loan, take
such action as shall be necessary to allow the Issuer or the
Trustee to cause such Lender to repurchase such Financed FFELP
Loan or to substitute a different Eligible Loan in accordance
with the requirements of the applicable Student Loan Purchase
Agreement.
l. Prepare and file with the Secretary of Education or the Guarantee
Agency, as the case may be and as required, a Lender's manifest
of Financed FFELP Loans on all new accounts, accounts paid in
full and accounts converted to a repayment basis.
m. Prepare and furnish to the Issuer and the Trustee by the l0th day
of each month the following reports with respect to activity
concerning each Financed Student Loan during the preceding month:
(1) upon request, computer generated reports showing, in
reasonable detail, all transactions during such preceding
month concerning each Financed Student Loan serviced by the
Servicer;
(2) upon request, a report showing the unpaid principal balance
of each Financed Student Loan as of the last day of such
preceding month;
(3) upon request, with respect to Financed Student Loans in
repayment, a delinquency report or reports showing all
accounts past due as of the last day of such preceding month
in categories of 0-30 days, 31-60 days, 61-90 days, 91-120
days, 121-150 days, 151-180 days, 181-270 days and over 270
days;
(4) upon request, a report of Financed Student Loans paid in
full during such preceding month;
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<PAGE>
(5) a report specifying the number of and the aggregate unpaid
principal amount of claims made during such preceding month
on defaulted Financed Student Loans and during the then
current fiscal year of the Issuer and the number and
aggregate amount of such claims which were rejected by the
Guarantee Agency, if any, during such month and during the
then current fiscal year of the Issuer, the number and
aggregate unpaid principal amount of Financed Student Loans
being serviced by the Servicer as of the last day of such
preceding month, and the aggregate unpaid principal amount
of defaulted Financed Student Loans as of the last day of
such preceding month; and
(6) copies of all formal reports filed by the Servicer with
respect to Financed Student Loans with any person or entity
and such other reports which are available to the Servicer
and which may be reasonably requested from time to time by
the Issuer or the Trustee.
n. With respect to Financed Student Loans in repayment, prepare and
furnish to the Issuer and the Trustee upon request, copies of all
file updates and transactions listings, including, without
limitation, credits applied, Financed Student Loans paid and
exceptions listings.
o. Identify on the servicing system the Notes as the source of
financing for each such Financed Student Loan.
p. Maintain a duplicate or copy of the file or record (which may be
on microfilm or computer tape) pertaining to each Financed
Student Loan at a location separate and apart from that at which
the original of such file is maintained (such duplicate file to
include, without limitation, a copy of each loan application,
interim and payout note(s) if applicable, Guarantee Agreement,
disclosure statement and Secretary of Education Loan Transfer
Statement, where applicable).
q. Maintain the original promissory note pertaining to each Financed
FFELP Loan to be maintained in secure storage facilities to
protect, to the extent reasonable and possible under the
circumstances, such original file concerning each Financed FFELP
Loan.
r. Obtain and maintain imaged or microfilm copies and/or back-up
computer tapes (but in any case a copy of the promissory note
relating to each Financed Student Loan) at a separate location
adequate to ensure against loss or damage to the files pertaining
to the Financed Student Loans by reason of any casualty or theft;
obtain and maintain in force adequate insurance for loss or
damage to the file pertaining to the Financed Student Loans by
reason of any
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<PAGE>
casualty or theft; and the Servicer shall be liable for any costs
associated with, or loss to the Issuer resulting from, the
reconstruction of data related to the Financed Student Loans in
the event of natural disaster or the malfunction of any computer
systems.
s. Maintain in force fidelity bonds upon all personnel of the
Servicer insuring against any loss of money or other property
which the Trustee, the Issuer or the Servicer might suffer as a
consequence of any fraudulent or dishonest act of such personnel,
in an amount required by any supervisory agency of federal or
state government having jurisdiction, but if not so required,
then in an amount equal to at least the Servicer's current
coverage amounts and deductibles (as evidenced by the insurance
certificate delivered to the Issuer herewith) or such lesser
amount as shall be in writing determined from time to time by the
Issuer, with the approval of the Trustee, to be sufficient.
t. Answer all lawful inquiries received by the Servicer from Lenders
(in the case of FFELP Loans), SLFC (in the case of Alternative
Loans), the GOAL Funding Servicer (in the case of Financed GOAL
Funding Student Loans), Borrowers, Eligible Institutions, the
Secretary of Education, the Guarantee Agency, the Issuer or the
Trustee pertaining to Financed Student Loans, school status or
refunds, and cooperate to the extent necessary to gather the
information needed to answer such inquiries; provided, however,
that such inquiries may be referred to the Eligible Institution
which a student attended or is attending, if necessary, and the
Servicer shall have no responsibility with respect to disputes
between a Borrower and such Eligible institution regarding
tuition or registration.
u. Any communication received by the Servicer which is in the nature
of a complaint, shall be immediately answered by the Servicer.
v. File with the Secretary of Education in an accurate, timely and
complete manner "Lenders Request for Payment of Interest and
Special Allowance" (ED Form 799), or such other form or request
for payment directly to the Trustee of interest subsidy payments
and Special Allowance Payments as the Secretary of Education may
require, from time to time but in no event later than fifteen
(15) Business Days after the end of each calendar quarter.
In addition, the Servicer agrees that it will, for the fees specified in Section
18 hereof, perform all servicing obligations relating to Financed Student Loans
required of the Issuer or the Trustee, or which the Issuer or the Trustee is
required to cause the Servicer to perform.
7. Due Diligence. The Servicer agrees that in discharging its
-------------
obligations hereunder it shall:
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<PAGE>
a. Exercise due diligence in the origination, disbursement,
administration, servicing and collection of all Financed Student
Loans as the term "due diligence" is used in the Higher Education
Act and the Guarantee Program regulations;
b. Exercise reasonable care and diligence in the origination,
disbursement, acquisition, administration and collection of all
Financed Student Loans;
c. Attempt to collect or cause to be collected the Financed Student
Loans in a competent, diligent and orderly fashion, and in a
manner substantially in accordance with the requirements of the
Higher Education Act, the Secretary-of Education, the Guarantee
Agency, the Indenture (including specifically but without
limitation the provisions of Sections 5.5 through 5.8 of the
Indenture), the Alternative Loan Programs, the Student Loan
Purchase Agreements and each applicable Federal Reimbursement
Contract and Guarantee Agreement; and
d. Exercise reasonable prudence in those aspects of the
administration of the Program which are within its area of
responsibility.
8. Liaison with Lenders, SLFC, GOAL Funding, Eligible Institutions and
-------------------------------------------------------------------
Other Parties. The Servicer shall maintain one or more toll-free WATS telephone
- -------------
lines to provide telephone access to its Student Loan servicing office in
Aberdeen, South Dakota, by the Issuer, the Trustee, Lenders, SLFC, GOAL Funding,
Borrowers and Eligible Institutions. The applicable numbers for such telephone
lines shall be provided in writing to the Issuer and the Trustee and to each
Borrower. The Issuer, the Trustee and each such Borrower shall be promptly
advised in writing of each change to such telephone number.
9. Right of Inspection; Availability of Records; Audits.
----------------------------------------------------
a. Subject to any restrictions of applicable law, the Issuer, the
Trustee, each Guarantee Agency, the Secretary or any successor
thereto, the Comptroller of the Currency and/or any governmental
agency having jurisdiction over the Issuer or the Trustee (and,
in each case, such entities' representatives) (any such entity
being referred to herein as the "Examiner"), shall have the
right, at any time and from time to time, during normal business
hours, and upon reasonable notice to the Servicer (which may be
less than 5 days), to examine and audit any and all of the
Servicer's records or accounts pertaining to any Financed Student
Loan. Under the preceding sentence, the Examiner shall have the
right to examine and make copies of any documents related to
Financed Student Loans and to interview personnel involved in the
servicing. Subject to any access restrictions in any agreement
for provision of computer or data processing equipment or related
services, the Servicer shall make
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<PAGE>
available to the Examiner without charge all manuals, forms,
files and descriptions of the software necessary to enable the
Examiner to interpret and analyze the information and reports
produced by the system, it being understood that the Servicer
shall retain all title, rights and interest thereto and therein.
b. The Issuer and the Trustee shall each have the right to require
the Servicer to furnish such documents as it in its sole
discretion from time to time deems necessary to determine that
the Servicer has complied with the provisions of this Agreement,
the Student Loan Purchase Agreements and the Indenture,
including, without limitation, Sections 5.5 through 5.8 of the
Indenture.
c. If and to the extent required by the Higher Education Act and the
Guarantee Program regulations, the Servicer shall cause to have
prepared and shall submit to the Secretary of Education and the
Guarantee Agencies on or before the respective due dates thereof:
(1) any third-party servicer compliance audits and audited
financial statements required under the Higher Education Act
and the Guarantee Program regulations relating to the
Servicer and its servicing of Financed FFELP Loans; and,
(2) any lender compliance audits required under the Higher
Education Act and the Guarantee Program regulations relating
to the Trustee (as the holder of the Financed FFELP Loans)
and the Financed FFELP Loans.
The Servicer shall provide to the Issuer and the Trustee promptly
after it becomes available (and in no event later than 10
Business Days) a copy of each such audit and any other audit or
report required by the Secretary of Education, any Guaranty
Agency or other third party in connection with the Servicer's
activities in originating, acquiring and servicing the Financed
FFELP Loans.
d. The Servicer shall provide to the Issuer and the Trustee copies
of its annual third party (SAS70) audit reports, if such reports
are prepared, promptly following the Servicer's receipt thereof.
e. The Servicer shall provide to the Issuer and the Trustee its
annual financial statements, audited by a firm of independent
certified public accountants, within one hundred twenty (120)
days of the end of each fiscal year of the Servicer; and its
quarterly unaudited financial statements, within forty-five (45)
days of the end of each fiscal quarter of the Servicer.
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<PAGE>
f. If reports are not prepared and submitted under Section 9(c)
hereof or if the Trustee determines it is necessary as part of a
request under Section 9(b) hereof, upon the request of the
Trustee or the Issuer, the Servicer shall undergo an annual
audit, examination and review conducted by a firm of independent
public accountants with experience in auditing student loan
program operations under the Higher Education Act, independently
selected by the Issuer (or the Trustee if the Issuer fails to
make such selection), of its systems, programs, procedures,
services and operations to determine the Servicer's compliance
with this Agreement. If any such audit, examination and review
shall indicate to the Issuer or the Trustee that the Servicer is
not in material compliance with its obligations under this
Agreement, this Agreement may be terminated by the Issuer or the
Trustee on the basis of Section 11(a)(3) hereof (an audit,
examination or review under this subsection, however, is not
required for a termination under Section 11(a)(3)).
g. The costs of audits and reports prepared under subsections (c)
through (f) above shall be paid by the Servicer.
10. Amendments; Benefits; Termination. This Agreement (a) may be amended,
---------------------------------
supplemented or modified only by written instrument duly executed by all parties
hereto and only upon the receipt of a written certificate from the Issuer and
the Trustee that such amendment, supplement or modification will not deprive any
Holder of the Notes in any material respect of the security afforded by this
Agreement, (b) shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, and (c) except as
provided in Section 11 hereof, may not be terminated (except for cause) or
assigned by any party hereto without the prior written consent of the other
parties hereto; provided that the Trustee may make an assignment to its
successor as trustee under the Indenture if the Trustee shall cease serving as
trustee under the Indenture.
11. Termination.
-----------
a. This Agreement shall terminate with respect to the Servicer (in
the case of any of the following events relating solely to the
Servicer) or the Administrator (in the case of any of the
following events relating solely to the Administrator) or both
(in the case of any of the following events relating to both the
Servicer and the Administrator):
(1) upon the expiration of the term stated in Section 1 hereof;
(2) if the Servicer or the Administrator shall:
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(a) admit in writing its inability to pay its debts
generally as they become due;
(b) consent to the appointment of a custodian (as that term
is defined in the federal Bankruptcy Code) for or assignment
to a custodian of the whole or any substantial part of the
property of the Servicer or the Administrator, as the case
may be, or f ail to stay, set aside or vacate within sixty
(60) days from the date of entry thereof any order or decree
entered by a court of competent jurisdiction ordering such
appointment or assignment;
(c) commence any proceeding or file a petition under the
provisions of the federal Bankruptcy Code for liquidation,
reorganization or adjustment of debts, or under any
insolvency law or other statute or law providing for the
modification or adjustment of the rights of creditors, or
fail to stay, set aside or vacate within sixty (60) days
from the date of entry thereof any order or decree entered
by a court of competent jurisdiction pursuant to an
involuntary proceeding, whether under federal or state law,
providing for liquidation or reorganization of the Servicer
or the Administrator, as the case may be, or modification or
adjustment of the rights of creditors; or
(d) contest in writing the validity or enforceability of
this Agreement as a whole or deny in writing that this
Agreement as a whole is binding upon the Servicer or the
Administrator, as the case may be;
(3) upon written notice by the Issuer or the Trustee to the
Servicer or the Administrator, as applicable, if the
Servicer or the Administrator materially breaches its
obligations, or any representation or warranty, under this
Agreement or upon written notice by the Issuer or the
Trustee to the Servicer on the basis of Section 9(f) hereof;
or
(4) upon written notice by the Issuer or the Trustee to the
Servicer, if at any time the Guarantee Agency or the
Department of Education has issued a notice of suspension or
termination against the Servicer, or has suspended or
terminated the payment of all claims with respect to
Financed FFELP Loans or, in the case of the Department of
Education, all Special Allowance Payments or interest
benefit payments with respect to Financed FFELP Loans as a
result of actions or omissions of the Servicer (it being
understood that the cessation of less than all such claims
or payments may constitute a breach under Section 11(a)(3)
hereof).
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<PAGE>
Notwithstanding the foregoing, any termination pursuant to
clauses (3) or (4) of this subsection (a) will be subject to the
following conditions. If such breach under clause (3) or
suspension or termination under clause (4) is capable of being
cured within ninety (90) days without, in the judgment of the
Trustee, adversely affecting the security provided to the
Noteholders by the Financed Student Loans and the related
Guarantee payments, Special Allowance Payments and interest
subsidy payments, the Servicer or the Administrator, as the case
may be, shall have the right to cure such breach, within ninety
(90) days of the date the Servicer or the Administrator, as the
case may be, learns of such breach or receives notice of such
breach from the Issuer or the Trustee, prior to such termination.
If such breach is not capable of being cured in the manner
specified above, no termination pursuant to clause (3) or (4)
shall occur if, in the judgment of the Trustee, such breach or
suspension or termination will not adversely affect the security
provided the Noteholders by the Financed Student Loans and any
related Guarantee, Special Allowance Payments and interest
subsidy payments.
Each of the Servicer and the Administrator agrees to promptly
notify the Trustee, the Issuer and each Rating Agency of any
occurrence or condition which constitutes (or which with the
passage of time or the giving of notice or both would constitute)
an event permitting the termination of this Agreement.
b. If this Agreement shall be terminated with respect to the
Servicer under subsection (a), or if any Financed Student Loan is
sold or otherwise transferred by the Trustee (for the account and
on behalf of the Issuer) to another person, then any Financed
Student Loans then being serviced hereunder (or the particular
Financed Student Loans that are sold or otherwise transferred, as
the case may be) shall be transferred by the Servicer to a
servicing system of the Issuer, the Trustee or their designee and
(i) the Servicer shall promptly provide the Issuer and the
Trustee with every reasonable and necessary assistance, including
data processing support, to timely transfer the Financed Student
Loans and all promissory notes and all records related to the
Financed Student Loans (including system records), together with
all necessary or proper assignments, transfers and documents of
authority, and (ii) the actual documented costs and expenses of
such transfer and of the conversion by the replacement servicer
of such Financed Student Loans to such replacement servicing
system shall be paid by the Servicer if such termination is by
the Issuer or the Trustee by reason of the occurrence of an event
described in Section 11(a)(2), (3) or (4). There shall be no
additional charge to the Issuer or the Trustee for the Servicer's
handling of assignments and transfers of Financed Student Loans
in the ordinary course.
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<PAGE>
c. If this Agreement shall be terminated with respect to the
Servicer or the Administrator, or both, under subsection (a), the
terminated party agrees that it shall continue to perform all its
obligations under this Agreement until a successor servicer or
administrator, as the case may be, has been appointed or until
otherwise directed in writing by the Trustee.
12. Disposition of Files on Termination. Upon termination of this
-----------------------------------
Agreement with respect to the Servicer or the Administrator, all files and
information held by the Servicer or the Administrator, as the case may be, in
connection herewith (including computer information) will be turned over to the
Issuer or its designee in such form (which may include microfilm) as the Issuer
may reasonably request, upon reimbursement by the Issuer for reasonable costs,
except as otherwise specified in Section 11(b) above.
13. Servicer and Administrator Not Agents. Neither the Servicer nor the
-------------------------------------
Administrator is, nor shall they hold themselves out to be, the agent of the
Issuer or the Trustee except for the specific limited purposes set forth in this
Agreement. Except as set forth in this Agreement, the Issuer and the Trustee
may not direct the methods or means by which the Servicer or the Administrator
shall accomplish its duties under this Agreement.
14. Maintenance of Records.
----------------------
a. The Servicer shall retain information and documentation
pertaining to the Financed Student Loans (including, but not
limited to, the information and documentation to be delivered to
the Servicer in accordance with Section 3 hereof) which comes
into the physical custody or possession of the Servicer as a
result of this Agreement or by the servicing of the Financed
Student Loans by the Servicer, unless and until the Trustee shall
notify the Servicer in writing to the contrary, whereupon such
physical custody and possession shall be transferred in the
manner directed by the Trustee. Nevertheless, the Trustee shall
retain possession of the original Student Loan Note with respect
to each Alternative Loan and may elect to retain such other
original documentation as it may, upon the advice of Counsel,
consider necessary or advisable to protect its first security
interest in the Financed Student Loans.
b. The Servicer shall maintain original documentation and system
records for each Financed Student Loan, segregated from any other
loans or assets of the Servicer or any other party and clearly
labeled so as to identify the Financed Student Loans as property
of the Trustee (for the account and on behalf of the Issuer) and
as security for the Notes, provided that the Servicer may combine
original documentation and system records for each consolidated
serial loan so long as the Servicer does so in a manner which
will ensure that each Financed Student Loan comprising such a
consolidated serial loan may be separately identified and
transferred or sold. The Servicer shall hold such
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<PAGE>
documentation and records subject to this Agreement and the
Indenture. From time to time the Servicer shall, upon request by
the Trustee or the Issuer and the Trustee, submit such
information and take such action as may be reasonably required by
the Trustee or the Issuer and the Trustee, to assure that the
Financed Student Loans are maintained in a proper and secure
condition.
c. Except as required by law and permitted by Section 6(t) hereof,
the Servicer shall maintain the confidentiality of the
information provided hereunder and shall not disclose or in any
way communicate such information to third parties without the
express written consent of the Issuer and the Trustee. The
Servicer shall provide a proper security system for access to
original documents and to its computer system.
d. With respect to the original promissory note relating to each
Financed FFELP Loan, the obligations of the Servicer shall be
only to the Trustee during the time the Notes are Outstanding and
the Issuer shall have no authority during the time the Notes are
Outstanding to direct the Servicer in its activities with respect
to such original promissory notes.
15. Representations, Warranties and Agreements. SLFC hereby represents,
------------------------------------------
warrants and agrees as follows:
a. SLFC is duly organized and validly existing as a corporation in
good standing under the laws of the State of South Dakota and is
duly qualified to conduct its business in good standing in the
State of South Dakota and is qualified to do business in all
other States where action by SLFC is required to carry out the
obligations of the Servicer and the Administrator under this
Agreement.
b. SLFC has the power and authority (corporate and other) to own its
assets and carry on its business as now being conducted and to
enter into, and perform in accordance with the terms of, this
Agreement.
c. SLFC has, and its officers acting on its behalf have, full legal
authority to engage in the transactions contemplated by this
Agreement; the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and
compliance with the terms, conditions and provisions of this
Agreement do not and will not conflict with or result in a breach
of any of the terms, conditions or provisions of the articles of
incorporation or bylaws of SLFC or any agreement or instrument to
which SLFC is a party or by which it is bound, or constitute a
default thereunder; SLFC is not a party to or bound by any
agreement or instrument or subject to any charter or other
corporate restriction or judgment, order, writ, injunction,
decree, law, rule or regulation which may materially and
adversely affect the ability of SLFC to
-19-
<PAGE>
perform its obligations under this Agreement, and this Agreement
constitutes a valid and binding obligation of SLFC enforceable
against it in accordance with its terms, and no consent,
approval, license, exemption or authorization of, or filing or
registration with, any government or governmental body (i) which
has not been made or obtained is required in connection with the
execution and delivery of this Agreement, and (ii) which has not
been or will not be made or obtained is or will be required in
connection with the consummation of the transactions herein
contemplated.
16. Notification to Borrowers. The parties hereto acknowledge and agree
-------------------------
that each Student Loan Purchase Agreement provides that the Lender (in the case
of FFELP Loans) or SLFC (in the case of Alternative Loans), as the case may be,
which is a party thereto, and that each Transfer Agreement provides that GOAL
Funding, shall, to the extent required by the Higher Education Act and the
Guarantee Program regulations or the Alternative Loan Program, as appropriate,
notify, or cause to be notified, each Borrower under each Financed Student Loan
of the assignment and transfer to the Trustee (but for the account and on behalf
of the Issuer) of the Lender's, SLFC's or GOAL Funding's interest in such
Financed Student Loan and shall direct the Borrower to make all payments thereon
directly to the Servicer until otherwise notified by the Trustee. To the extent
permitted by the Higher Education Act and the Guarantee Program regulations or
the Alternative Loan Program, as appropriate, the Servicer may, on behalf of the
Issuer, waive this requirement of any Lender (in the case of FFELP Loans), SLFC
(in the case of Alternative Loans) or GOAL Funding (in the case of Financed GOAL
Funding Student Loans) if the notice is sent by the Servicer on behalf of such
Lender, SLFC or GOAL Funding.
17. Obligations to Forward Payments. The parties hereto acknowledge and
-------------------------------
agree that each Student Loan Purchase Agreement provides that if the Lender (in
the case of FFELP Loans) or SLFC (in the case of Alternative Loans), as the case
may be, which is a party thereto, and that each Transfer Agreement provides
that if GOAL Funding, after any Loan Purchase Date, is the recipient of any
funds, from whatever source received, which constitute payment of principal,
interest or Special Allowance Payments accrued with respect to any Financed
Student Loan for any period subsequent to such Loan Purchase Date, such Lender,
SLFC or GOAL Funding shall promptly remit, or cause to be remitted, all such
funds to the Servicer or in such manner as the Trustee may otherwise direct. If
any such funds shall he received by the Trustee or by a person to whom the
Trustee has directed such funds to be remitted, the Trustee shall furnish the
Servicer with prompt advice as to the receipt thereof.
18. Fees; No Petition. The Issuer shall pay, or shall cause the Trustee
-----------------
to pay, from funds available for such purpose under the Indenture, to the
Servicer and the Administrator, for the performance of the Servicer's and the
Administrator's functions under this Agreement, a monthly fee in an amount each
month equal to .0875% of the outstanding principal balance of all Financed
Student Loans as of the last day of the immediately preceding month; provided,
however, that such monthly fee shall be reduced by an amount equal to the
Administrative Expenses incurred by the Issuer for employee compensation,
subject to a maximum amount for each calendar year of $50,000,
-20-
<PAGE>
unless the Servicer agrees to a higher amount. Such fee shall be paid to the
Servicer on a monthly basis within fifteen (15) days of receipt by the Trustee
of an itemized written monthly billing statement from the Servicer. The Servicer
shall promptly remit to the Administrator its allocable portion (equal to one-
fourth) of such fee. If the Servicer or the Administrator believes that it is
necessary to increase the monthly fee payable hereunder, it shall provide a
written request to the Issuer and the Trustee of its need for an increase in
such fee, together with all information required under the Indenture for the
Trustee to approve an increase in the fees payable hereunder. Each of the
Servicer and the Administrator acknowledges that such fee shall not be increased
unless the conditions for increasing such fee under the Indenture have been
satisfied.
Each of the Servicer and the Administrator acknowledges that the Issuer and
the Trustee contemplate paying all fees payable under this Agreement solely from
funds available for such purpose in the Administration Fund created under the
Indenture, which funds are primarily dependent upon collection by the Servicer
and receipt by the Trustee of payments with respect to the Financed Student
Loans. Each of the Servicer and the Administrator covenants and agrees to
continue to be bound by the terms and provisions of this Agreement relating to
the Financed Student Loans in all respects, and to perform for a period of one
hundred twenty (120) days its obligations hereunder, regardless of the receipt
or non-receipt on a timely basis by it of any payments in respect of fees under
this Agreement.
Each of the Servicer and the Administrator, by entering into this
Agreement, covenants and agrees that it will not at any time institute against
the Issuer, or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligation relating to this Agreement.
19. Cooperation. Each party covenants and agrees to fully cooperate with
-----------
the other parties hereto to facilitate the transactions contemplated hereunder
and by the Student Loan Purchase Agreements and the Indenture.
20. Payment of Expenses. Each party to this Agreement shall pay its own
-------------------
expenses incurred in connection with the preparation, execution and delivery of
this Agreement, including, but not limited to, the fees and expenses of legal
counsel.
21. Administrative Functions to be Performed by Servicer and
--------------------------------------------------------
Administrator. The Issuer, the Trustee and the Servicer agree that the Servicer
- -------------
shall perform the following administrative functions on behalf of the Issuer as
part of its responsibilities under this Agreement.
a. Provide all necessary personnel, facilities, equipment, forms and
supplies for operating the Program in accordance with Sections 5.5
through 5.8 of the Indenture;
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<PAGE>
b. Disseminate information on the Program to Lenders and to student
financial aid officers in Eligible Institutions and to other
persons as necessary;
c. Maintain accurate and complete records on all aspects of the
Program, which records shall be available for inspection at any
time by any director or officer of the Issuer and by auditors
employed by the Issuer; and
d. Prepare and submit to the Trustee on or before the 25th day of each
month (and if such day is not a Business Day, on the next
succeeding Business Day), the monthly reports required to be
delivered to the Noteholders pursuant to Section 5.23 of the
Indenture, the form of which is included as Exhibit A hereto. The
Servicer also shall (i) determine the Net Loan Rate and notify the
Trustee and the Auction Agent thereof at the times required by the
Indenture, and (ii) prepare for filing, and provide such other
assistance as is required by the Issuer to file, any other reports
required to be filed by the Issuer under the Higher Education Act
and any Alternative Loan Program.
The Issuer, the Trustee and the Administrator agree that the Administrator
shall, on behalf of the Issuer and as part of its responsibilities under this
Agreement, cause the duties and responsibilities of the Issuer under the
Indenture to be performed, including, but not limited to, the actions set forth
below. The Administrator shall advise the Issuer when action by the Issuer is
necessary to comply with the Issuer's duties under the Indenture and the
agreements relating thereto. The Administrator shall prepare, or shall cause the
preparation by other appropriate persons of, all such documents, reports,
filings, instruments, certificates and opinions (other than those to be prepared
by the Servicer as part of its responsibilities under this Agreement) as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Administrator shall take all
appropriate action, including but not limited to, the following:
1. obtaining and preserving the Issuer's qualification to do business
in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the
Indenture, the Notes and each instrument and agreement included in
the Trust Estate;
2. preparing all supplements, amendments, financing statements,
continuation statements, instruments of further assurance and other
instruments, in accordance with the relevant provisions of the
Indenture, necessary to protect the Trust Estate;
3. arranging for the delivery of any opinions of counsel and
certificates of officers of the Issuer and other statements
required under the relevant provisions of the Indenture;
-22-
<PAGE>
4. preparing and obtaining documents and instruments required for the
release of the Issuer from its obligations under the Indenture;
5. monitoring the Issuer's obligations as to the satisfaction and
discharge of the Indenture;
6. preparing, obtaining or filing the instruments and other documents
required for the release of Trust Estate from the lien of the
Indenture;
7. taking such actions as may be required of the Issuer under the
Indenture upon the occurrence and continuance of a default or an
Event of Default thereunder;
8. causing the directions of the Issuer to be carried out in
connection with opening one or more accounts in the Issuer's name,
preparing any orders of the Issuer and other documents required,
and taking all other actions necessary, with respect to investment
and reinvestment of funds in the Funds and Accounts established
under the Indenture in accordance with the investment criteria and
requirements of the Indenture and the investment policies adopted
by the Issuer from time to time;
9. preparing or coordinating the obtaining of all documents required
with respect to any requests by the Issuer of the Trustee to take
any action under the Indenture;
10. preparing orders of the Issuer and obtaining all documents as
necessary or required for the execution of any amendments or
supplements to the Indenture;
11. preparing and delivering to the Trustee any agreements with
respect to notice provisions; and
12. taking such actions as may be required of the Issuer under any
agreement between the Issuer and other parties relating to the
Indenture.
22. Servicer as Bailee.
------------------
a. The Servicer, in holding Loan Documents relating to the Financed
Student Loans, holds such Loan Documents as bailee for and on
behalf of the Trustee.
b. No Loan Documents held by the Servicer on behalf of the Trustee
hereunder shall be released or delivered to the Issuer or any
other person (other than claim filings in the ordinary course with
the Guaranty Agencies and sales or
-23-
<PAGE>
transfers permitted under the Indenture) without the prior
written consent of the Trustee.
c. The Servicer shall maintain all Loan Documents in a manner which
clearly identifies them as being held by the Servicer as bailee
for and on behalf of the Trustee and not for or on behalf of the
Issuer or any other person.
d. No assignment or purported assignment by the Issuer or any other
person (other than the Trustee) of any Loan Documents held by the
Servicer on behalf of the Trustee hereunder shall be recognized
by the Servicer, and the Servicer shall provide immediate notice
to the Trustee upon receiving notice of any such assignment or
purported assignment.
e. The Servicer hereby represents, warrants and acknowledges that
the Servicer, in serving as bailee under this Section, is acting
exclusively as the bailee and agent of the Trustee, and not of
the Issuer or any other person, with respect to the Loan
Documents.
f. The Servicer hereby waives any lien which the Servicer might have
pursuant to statute or otherwise available at law or in equity on
the Financed Student Loans and the Loan Documents held by the
Servicer on behalf of the Trustee hereunder, including all monies
and proceeds derived therefrom or relating thereto.
23. Indemnification. The Servicer and the Administrator shall each
---------------
indemnify and hold harmless the Issuer and the Trustee from and against any
loss, cost, damage or expense, including reasonable attorney's fees, to the
extent that such loss, cost, damage or expense arises out of the failure of the
Servicer or the Administrator, as the case may be, to perform its obligations
under this Agreement. In addition, and without limiting the generality of the
foregoing, the Servicer and the Administrator shall each defend and indemnify
the Issuer and the Trustee against, and hold each harmless from, all claims,
losses, liabilities and expenses (including reasonable attorneys' fees) arising
from or in connection with:
a. any claim of infringement of any patent, trade secret, copyright,
trademark, service mark, trade name or other proprietary right
alleged to have occurred as a result of the performance of
services hereunder by the Servicer or the Administrator, as the
case may be; or
b. any claim by an employee of the Servicer or the Administrator, as
the case may be, arising in consequence of, or relating to, the
employee's employment by the Servicer or the Administrator, as
applicable.
24. Miscellaneous.
-------------
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<PAGE>
a. Any material written communication received at any time by the
Issuer or the Trustee with respect to a Financed Student Loan or
the Borrower under such a Financed Student Loan shall be
immediately transmitted by the Issuer or the Trustee, as the case
may be, to the Servicer. Such communications shall include, but
not be limited to, letters, notices of death or disability,
adjudications of bankruptcy and like documents, and forms
requesting forbearance, deferment of repayment or loan
cancellations.
b. This Agreement shall be governed by the laws of the State of
South Dakota.
c. All covenants and agreements herein contained shall extend to and
be obligatory upon all successors and assigns of the respective
parties hereto.
d. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall be
deemed to constitute but one and the same instrument.
e. If any provisions of this Agreement shall be held, or deemed to
be, or shall, in fact, be inoperative or unenforceable as applied
in any particular situation, such circumstance shall not have the
effect of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences,
clauses or paragraphs herein contained shall not affect the
remaining portions of this Agreement or any part hereof.
f. All notices, requests, demands or other instruments which may or
are required to be given by any party to another party, shall be
in writing, and each shall be deemed to have been properly given
when served personally on an officer of the party to which such
notice is to be given, or upon expiration of a period of forty-
eight (48) hours (excluding weekends and holidays) from and after
the postmark thereof when mailed postage prepaid by registered or
certified mail, requesting return receipt, addressed as follows:
if intended for the Issuer:
Education Loans Incorporated
Suite 200
105 First Avenue Southwest
Aberdeen, South Dakota 57401
Attention: President
if intended for the Trustee:
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<PAGE>
U.S. Bank National Association
P.O. Box 5308
141 North Main Avenue, Suite 300
Sioux Falls, South Dakota 57104-6429
Attention: Corporate Trust Department
if intended for the Servicer or the Administrator:
Student Loan Finance Corporation
105 First Avenue Southwest
Aberdeen, South Dakota 57401
Attention: President
Any party may change the address to which subsequent notices are
to be sent to it by notice to the others given as aforesaid, but
any such notice of change, if sent by mail, shall not be
effective until the fifth business day after it is mailed.
g. This Agreement may not be terminated by any party hereto except
in the manner and with the effect herein specifically provided.
h. Time is of the essence in this Agreement.
i No remedy by the terms of this Agreement conferred upon or
reserved to the Trustee or the Issuer is intended to be exclusive
of any other remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this
Agreement or existing at law or in equity or by statute on or
after the date of this Agreement, including, without limitation,
the right to such equitable relief by way of injunction,
mandatory or prohibitory, to prevent the breach or threatened
breach of any of the provisions of this Agreement or to enforce
the performance hereof.
j. This Agreement has been made and entered into not only for the
benefit of the Issuer, the Trustee, the Servicer and the
Administrator, but also for the benefit of all Noteholders, and
its provisions may be enforced not only by the parties to this
Agreement but also by each Noteholder in the manner and to the
extent such Noteholders may enforce provisions of the Indenture.
The Servicer specifically acknowledges the rights of the Trustee
pursuant to Section 6.3 of the Indenture.
k. Any information required by this Agreement to be provided by the
Servicer with respect to a Financed Student Loan may in the case
of Financed Student Loans that have been consolidated be provided
with respect to a consolidated
-26-
<PAGE>
Financed Student Loan, provided that such information at a
minimum meets the requirements of the Secretary of Education and
the Guarantee Agency, as the case may be, for the collection by
the Trustee of interest subsidy payments, Special Allowance
Payments, and claim payments, and provides sufficient information
as requested by the Issuer to enable the Issuer to comply with
any arbitrage requirements under the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
l. SLFC specifically acknowledges that the Issuer will be making
representations and warranties regarding the Student Loans to be
Financed as part of the proposed public offering of the Notes
based in part on the accuracy of SLFC's and warranties in this
Agreement. SLFC agrees to cooperate with the Issuer and to
furnish all information in its possession appropriate for
inclusion in the Issuer's Prospectus. SLFC agrees to indemnify
and save the Trustee, the Issuer and the underwriters for the
Notes harmless of, from and against any and all loss, cost,
damage or expense, including reasonable attorneys' fees, incurred
by reason of any breach of SLFC's warranties or representations
hereunder or any false or misleading representations of SLFC or
any failure to disclose any matter which makes the warranties and
representations herein misleading or any inaccuracy in any
information furnished by SLFC in connection herewith.
m. It is hereby acknowledged and agreed that the Trustee will be
serving as "Eligible Lender Trustee" under the Indenture and that
(i) legal title to all Financed Student Loans constituting FFELP
Loans will, pursuant to the applicable FFELP Loan Purchase
Agreement, be transferred to the Trustee in such capacity for the
benefit of the Issuer, and (ii) upon such transfer, the Trustee
will be the legal owner and the Issuer will be the beneficial
owner of such FFELP Loans.
25. Indemnification with respect to Prior Servicing. Pursuant to the
-----------------------------------------------
Series 1999-1 Transfer Agreement (as defined in the Indenture), the Issuer and
the Trustee have purchased student loans described therein (the "Series 1999-1
Transferred Student Loans") from GOAL Funding and the GOAL Funding Trustee,
which Series 1999-1 Transferred Student Loans were, prior to such purchase,
serviced by the Servicer under the GOAL Funding Servicing Agreement. The
Servicer hereby agrees to indemnify and hold harmless the Issuer and the Trustee
from and against any loss, cost, damage or expense, including reasonable
attorney's fees, to the extent that such loss, cost, damage or expense arises
out of the failure of the Servicer to have performed its obligations under the
GOAL Funding Servicing Agreement.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands by their
officers thereunto duly authorized and executed this Agreement as of the day and
year first above written.
EDUCATION LOANS INCORPORATED
By:/s/ A. Norgrin Sanderson
----------------------------
President
STUDENT LOAN FINANCE
CORPORATION, as Servicer and
Administrator
By:/s/ A. Norgrin Sanderson
----------------------------
President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Thomas W. Steele
----------------------------
Its Trust Officer
-------------------------
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<PAGE>
EXHIBIT A
Student Loan Finance Corporation
Monthly Statement Pursuant to Section 5.23 of the Indenture and Section 21 of
the Servicing and Administration Agreement (Unaudited)
Education Loans Incorporated
Student Loan Asset-Backed Notes
Report for the Month Ended __________, ____ [sample for ________, 1999]
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<PAGE>
EXHIBIT 10.3
================================================================================
TRANSFER AGREEMENT
from
GOAL FUNDING, INC.
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
to
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
and
EDUCATION LOANS INCORPORATED
Dated as of December 1, 1999
================================================================================
<PAGE>
GOAL FUNDING, INC., a Delaware corporation ("GOAL Funding"), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association, as trustee (the "Warehouse
Trustee" and, together with GOAL Funding, the "Transferors") under the
Indenture, dated as of May 1, 1999 (the "Warehouse Indenture"), among GOAL
Funding, Kitty Hawk Funding Corporation, the financial institutions named
therein, NationsBank, N.A., AMBAC Assurance Corporation and the Warehouse
Trustee, in consideration of the payment (a) to the Transferors of
$89,998,002.02 (which amount is equal to the principal balance of, plus accrued
and unpaid interest and special allowance payments on, the Assigned Student
Loans, as hereinafter defined, as of the effective date of this Agreement), and
(b) to Student Loan Finance Corporation ("SLFC") of $981,529 (to reimburse SLFC
for amounts contributed by SLFC to GOAL Funding to enable the Transferors to pay
the premium portion of the purchase price of the Assigned Student Loans, as
hereinafter defined, constituting FFELP Loans) receipt of which is hereby
acknowledged, hereby assign, transfer and convey, subject to the following
paragraph, to U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Note Trustee")
under the Indenture of Trust, dated as of December 1, 1999 (as amended and
supplemented, including by a First Supplemental Indenture of Trust, dated as of
December 1, 1999, the "Note Indenture"), between Education Loans Incorporated, a
Delaware corporation (the "Corporation"), and the Note Trustee, and to the
Corporation, as their interests may appear, without recourse, all right, title
and interest in, to and under (1) each of the Student Loans (as defined in the
Note Indenture), including any evidences of indebtedness and all related
documentation, identified in the list attached hereto as Exhibit A (the
"Assigned Student Loans"), and by this reference made a part hereof, each of
which was acquired with moneys available therefor under the Warehouse Indenture,
either through the origination thereof on behalf of GOAL Funding or through the
purchase thereof by GOAL Funding pursuant to the Student Loan Purchase
Agreements identified in the list attached hereto as Exhibit B (the "Student
Loan Purchase Agreements"), together with accrued and unpaid borrower interest,
federal interest subsidy payments and Special Allowance Payments thereon, (2)
the Student Loan Purchase Agreements, to the extent they relate to the Assigned
Student Loans, (3) all rights and remedies of the Transferors under all of the
foregoing, including the right to enforce the same in the same manner and to the
same extent as the Transferors might do but for the execution and delivery of
this Transfer Agreement, (4) $1,027,937.56 from amounts on deposit in the
Guarantee Account established under the Warehouse Indenture, such amount having
been transferred on the date hereof to the Note Trustee for deposit in the
Alternative Loan Guarantee Fund established under the Note Indenture, and (5)
all proceeds of any of the foregoing.
It is hereby acknowledged that the foregoing transfer and assignment is
being made pursuant to, and subject to the provisions of, Section 5.1 of the
Note Indenture, which provides that the Note Trustee shall be the legal owner of
all student loans financed under the Note Indenture (which includes the Assigned
Student Loans) for all purposes of the Higher Education Act and each Guarantee
Program and Alternative Loan Program (as such terms are defined in the Note
Indenture), but that the Note Trustee shall so hold such financed student loans
(including the Assigned Student Loans) in its capacity as trustee of an express
trust created pursuant to the Note Indenture and, in such capacity, shall be
acting on behalf of the Corporation, as the beneficial owner of such financed
student loans (including the Assigned Student Loans), as well as the Holders of
the Notes and all Other Beneficiaries, as their interests may appear.
<PAGE>
To the extent required by the Higher Education Act and the Guarantee
Program regulations or the Alternative Loan Program, the Transferors agree to
notify, or cause to be notified, each borrower under each Assigned Student Loan
of the assignment and transfer to the Trustee (but for the account and on behalf
of the Corporation) of the Transferors' interest in such Assigned Student Loan
and shall direct the borrower to make all payments thereon directly to the
Servicer until otherwise notified by the Trustee. To the extent permitted by the
Higher Education Act and the Guarantee Program regulations or the Alternative
Loan Program, as appropriate, the Corporation may waive this requirement if the
notice is or has been sent by the Servicer on behalf of the Transferors.
If either of the Transferors is the recipient of any funds, from whatever
source received, which constitute payment of principal with respect to any
Assigned Student Loan, or accrued and unpaid borrower interest, federal interest
subsidy payments and Special Allowance Payments thereon as of the date of this
Agreement, or accrued interest or Special Allowance Payments accrued thereon for
any period subsequent to the date of this Agreement, such Transferor shall
promptly remit, or cause to be remitted, all such funds to the Servicer or in
such manner as the Trustee may otherwise direct.
Each of the Corporation and the Note Trustee, by entering into this
Agreement, covenants and agrees that it will not at any time institute against
GOAL Funding, or join in any institution against GOAL Funding of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligation relating to this Agreement.
Each of the Transferors, by entering into this Agreement, covenants and
agrees that it will not at any time institute against the Corporation, or join
in any institution against the Corporation of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligation relating to this Agreement.
The Transferors further agree to individually endorse any of the
above-described Assigned Student Loans or any documents related thereto payable
to the Note Trustee upon the request of the Note Trustee for any reason,
including, without limitation, the default of any maker of any of the Assigned
Student Loans described hereinabove or assigned hereunder, and the default of
the Corporation under the Note Indenture.
All terms capitalized but not defined herein shall have the meaning
ascribed thereto in the Note Indenture.
This Transfer Agreement shall be governed by, and construed in accordance
with, the laws of the State of South Dakota.
-2-
<PAGE>
This transfer and assignment shall be effective the 7th day of December,
1999.
GOAL FUNDING, INC
By: /s/ A. Norgrin Sanderson
----------------------------------
President
U.S. BANK NATIONAL ASSOCIATION,
as Warehouse Trustee
By: /s/ Thomas W. Steele
----------------------------------
Trust Officer
The undersigned, as Note Trustee, hereby accepts the above Transfer
Agreement and acknowledges receipt of the Assigned Student Loans (including any
evidences of indebtedness and all related documentation), the Student Loan
Purchase Agreements and the $89,998,002.02 described above.
Dated this 7th day of December, 1999.
U.S. BANK NATIONAL ASSOCIATION,
as Note Trustee
By: /s/ Thomas W. Steele
----------------------------------
Trust Officer
-3-
<PAGE>
The Corporation hereby accepts the above Transfer Agreement.
Dated this 7th day of December, 1999.
EDUCATION LOANS INCORPORATED
By: /s/ A. Norgrin Sanderson
----------------------------------
President
-4-
<PAGE>
EXHIBIT A
---------
[List of Assigned Student Loans]
A-1
<PAGE>
EXHIBIT B
---------
[List of Student Loan Purchase Agreements]
B-1
