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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
JUNE 20, 1997
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PNC STUDENT LOAN TRUST I
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 333-25433-01
DELAWARE 36-4142114
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
C/O THE FIRST NATIONAL BANK OF CHICAGO, AS ELIGIBLE LENDER TRUSTEE
ONE FIRST NATIONAL PLAZA, SUITE 0216
CHICAGO, ILLINOIS 60670
(Address, including zip code, of Registrant's principal executive offices)
(312) 407-1892
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On June 25, 1997, PNC Student Loan Trust I, a Delaware statutory
business trust (the "Trust"), sold and issued $1.03 billion
aggregate principal amount of Student Loan Asset-Backed Notes,
Series 1997-2 (the "Notes"), consisting of 10 classes of Notes and
original principal amounts as follows: Senior LIBOR Rate Class A-1
Asset-Backed Notes in the aggregate principal amount of $90 million;
Senior Fixed Rate Class A-2 Asset-Backed Notes (the "Class A-2
Notes") in the aggregate principal amount of $107 million; Senior
Fixed Rate Class A-3 Asset-Backed Notes (the "Class A-3 Notes") in
the aggregate principal amount of $107 million; Senior Fixed Rate
Class A-4 Asset-Backed Notes (the "Class A-4 Notes") in the
aggregate principal amount of $102 million; Senior Fixed Rate Class
A-5 Asset-Backed Notes (the "Class A-5 Notes") in the aggregate
principal amount of $94 million; Senior Fixed Rate Class A-6 Asset-
Backed Notes (the "Class A-6 Notes") in the aggregate principal
amount of $72.5 million; Senior Fixed Rate Class A-7 Asset-Backed
Notes (the "Class A-7 Notes") in the aggregate principal amount of
$121 million; Senior LIBOR Rate Class A-8 Asset-Backed Notes in the
aggregate principal amount of $175 million; Senior LIBOR Rate Class
A-9 Asset-Backed Notes in the aggregate principal amount of $125.45
million; and Subordinate LIBOR Rate Class B Asset-Backed Notes in
the aggregate principal amount of $36.05 million.
The Notes were registered under the Securities Act of 1933, as
amended, by a Registration Statement on Form S-3, as amended (File
No. 333-25433-01), which Registration Statement was declared
effective by the Securities and Exchange Commission on June 19, 1997.
The Notes were sold pursuant to an Underwriting Agreement dated as of
June 20, 1997, among PNC Bank, National Association ("PNC Bank,
N.A."), as Transferor (the "Transferor"), the Trust and Smith Barney
Inc., as representative for the Underwriters named therein. The Trust
issued the Notes pursuant to an Indenture dated as of March 27, 1997,
as amended by Amendment No. 1 dated as of June 25, 1997 and as
supplemented by the Second Terms Supplement dated as of June 25,
1997, among the Trust and Bankers Trust Company, as Indenture Trustee
(the "Indenture Trustee").
The Trust, which was formed on March 27, 1997, under the laws of the
State of Delaware, is governed by a Trust Agreement dated as of March
27, 1997, as amended by Amendment No. 1 dated as of June 25, 1997,
among PNC Bank, N.A., as depositor, The First National Bank of
Chicago, as Eligible Lender Trustee (the "Eligible Lender Trustee")
and First Chicago Delaware, Inc., as Delaware trustee. The assets of
the Trust include a pool of guaranteed education loans (the "Financed
Student Loans") to students and parents of students acquired by the
Eligible Lender Trustee on behalf of the Trust from PNC Bank, N.A.,
collections and other payments with respect to the Financed Student
Loans, monies on deposit in certain Trust accounts, and all of the
Trust's rights under swap agreements that the Trust entered into with
Deutsche Bank AG, New York Branch, with respect to the Class A-2
Notes, Class A-5 Notes and the Class A-7 Notes, and with Morgan
Guaranty Trust Company of New York, with respect to the Class A-3
Notes, the Class A-4 Notes and the Class A-6 Notes. The Notes are
collateralized by the assets of the Trust.
The Financed Student Loans were contributed to the Trust by PNC Bank,
National Association, pursuant to a Transfer and Servicing Agreement
dated as of June 25, 1997 (the "Transfer and Servicing Agreement").
In addition to being the Transferor, PNC Bank, N.A., acts as "Master
Servicer" with respect to the Financed Student Loans and as
"Administrator" on behalf of the Trust. Under the Transfer and
Servicing Agreement, until June 30, 2002 and subject to certain
specified conditions, at the option of the Transferor, Financed
Student Loans held by the Trust may be exchanged for other Federal
guaranteed student loans of the Transferor.
The Notes represent obligations of the Trust only and do not
represent interests in or obligations of PNC Bank, N.A., the Eligible
Lender Trustee, the Indenture Trustee or any of their respective
affiliates. The Notes do not evidence deposits of any bank, nor are
they guaranteed or insured by the Federal Deposit Insurance
Corporation or any governmental agency.
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ITEM 7. EXHIBITS
(c) Exhibits
The exhibits listed on the Exhibit Index on pages 4 and 5 of this
Form 8-K are filed herewith or incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PNC STUDENT LOAN TRUST I
(Registrant)
Date: July 1, 1997 By: PNC Bank, N.A.
not in its individual capacity
but solely as Administrator
--------------------------------
By: /s/ Bryan W. Ridley
--------------------------------
Bryan W. Ridley
Senior Vice President
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EXHIBIT INDEX
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1.1 Underwriting Agreement dated as of June 20, 1997, among PNC Bank, N.A.,
the Trust and Smith Barney Inc. as Representative of the several
Underwriters, filed herewith.
4.1 Indenture dated as of March 27, 1997, as amended as of June 25, 1997,
between the Trust and Bankers Trust Company as the Indenture Trustee,
filed herewith.
4.2 Second Terms Supplement to Indenture (including forms of Notes) dated
as of June 25, 1997, between the Trust and Bankers Trust Company as the
Indenture Trustee, filed herewith.
4.3 Trust Agreement dated as of March 27, 1997, among PNC Bank, N.A. as the
Depositor, The First National Bank of Chicago as the Eligible Lender
Trustee and First Chicago Delaware, Inc. as the Delaware Trustee,
incorporated by reference to Exhibit 4.3 to Amendment No. 1 to
Registration Statement on Form S-3 at File No. 333-25433-01.
4.4 Amendment No. 1 to Trust Agreement dated as of June 25, 1997, filed
herewith.
4.5 Transfer and Servicing Agreement dated as of June 25, 1997, among the
Trust, PNC Bank, N.A. as the Transferor, Master Servicer and
Administrator and The First National Bank of Chicago as the Eligible
Lender Trustee, filed herewith.
4.6 International Swap Dealers Association, Inc. Master Agreement and
Schedule thereto and Confirmations (re: Class A-3 Notes, Class A-4
Notes and Class A-6 Notes) between the Trust and Morgan Guaranty Trust
Company of New York as Swap Counterparty, filed herewith.
4.7 International Swap Dealers Association, Inc. Master Agreement and
Schedule thereto and Confirmations (re: Class A-2 Notes, Class A-5
Notes and Class A-7 Notes) between the Trust and Deutsche Bank AG - New
York Branch as Swap Counterparty, filed herewith.
4.8 Guarantee Agreement with the California Student Aid Commission
incorporated by reference to Exhibit 4.6 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
4.9 Guarantee Agreement with the Florida Department of Education
incorporated by reference to Exhibit 4.7 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
4.10 Guarantee Agreement with the Georgia Higher Education Assistance
Corporation incorporated by reference to Exhibit 4.8 to Amendment No. 2
to Registration Statement on Form S-3 at File No. 333-25433-01.
4.11 Guarantee Agreement with the Great Lakes Higher Education Corporation
incorporated by reference to Exhibit 4.9 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
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4.12 Guarantee Agreement with the Illinois Student Assistance Commission
incorporated by reference to Exhibit 4.10 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
4.13 Guarantee Agreement with the Kentucky Higher Education Assistance
Authority incorporated by reference to Exhibit 4.11 to Amendment No. 2
to Registration Statement on Form S-3 at File No. 333-25433-01.
4.14 Guarantee Agreement with the Michigan Higher Education Assistance
Authority incorporated by reference to Exhibit 4.12 to Amendment No. 2
to Registration Statement on Form S-3 at File No. 333-25433-01.
4.15 Guarantee Agreement with the New Jersey Higher Education Assistance
Authority incorporated by reference to Exhibit 4.13 to Amendment No. 2
to Registration Statement on Form S-3 at File No. 333-25433-01.
4.16 Guarantee Agreement with the New Mexico Student Loan Guarantee
Corporation incorporated by reference to Exhibit 4.14 to Amendment No.
2 to Registration Statement on Form S-3 at File No. 333-25433-01.
4.17 Guarantee Agreement with the Pennsylvania Higher Education Assistance
Agency incorporated by reference to Exhibit 4.15 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
4.18 Guarantee Agreement with the United Student Aid Funds, Inc.
incorporated by reference to Exhibit 4.16 to Amendment No. 2 to
Registration Statement on Form S-3 at File No. 333-25433-01.
99.1 Administration Agreement dated as of March 27, 1997, among the Trust,
PNC Bank, N.A. as the Administrator, The First National Bank of Chicago
as the Eligible Lender Trustee and Bankers Trust Company as the
Indenture Trustee, incorporated by reference to Exhibit 99.1 to
Amendment No. 1 to Registration Statement on Form S-3 at File No.
333-25433-01.
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Exhibit 1.1
PNC STUDENT LOAN TRUST I
$1,030,000,000 STUDENT LOAN ASSET BACKED NOTES
SERIES 1997-2
UNDERWRITING AGREEMENT
----------------------
June 20, 1997
SMITH BARNEY INC.
As Representative of the
several Underwriters
390 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
PNC Bank, National Association, a national banking association
(as transferor of the Financed Student Loans to the Trust (each as defined
below), the "Bank"), has formed a trust known as PNC Student Loan Trust I (the
"Trust") under the laws of the State of Delaware and the Bank proposes to cause
the Trust to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representative") are acting as
representative, pursuant to the terms of this Underwriting Agreement, Series
1997-2 Asset Backed Notes in the following Classes and initial principal
amounts: $90,000,000 Senior LIBOR Rate Class A-1 Asset Backed Notes (the "Class
A-1 Notes"), $107,000,000 Senior Fixed Rate Class A-2 Asset Backed Notes (the
"Class A-2 Notes"), $107,000,000 Senior Fixed Rate Class A-3 Asset Backed Notes
(the "Class A-3 Notes"), $102,000,000 Senior Fixed Rate Class A-4 Asset Backed
Notes (the "Class A-4 Notes"), $94,000,000 Senior Fixed Rate Class A-5 Asset
Backed Notes (the "Class A-5 Notes"), $72,500,000 Senior Fixed Rate Class A-6
Asset Backed Notes (the "Class A-6 Notes"), $121,000,000 Senior Fixed Rate Class
A-7 Asset Backed Notes (the "Class A-7 Notes"), $175,000,000 Senior LIBOR Rate
Class A-8 Asset Backed Notes (the "Class A-8 Notes"), $125,450,000 Senior LIBOR
Rate Class A-9 Asset Backed Notes (the "Class A-9 Notes" and together with the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class A-5 Notes, the Class A-6 Notes, the Class A-7 Notes and the Class A-8
Notes, the "Class A Notes") and $36,050,000 Subordinate LIBOR Rate Class B Asset
Backed Notes (the "Class B Notes" and together with the Class A Notes, the
"Notes"). The First National Bank of Chicago, a national banking association,
acts as eligible lender trustee (the "Eligible Lender Trustee") of the Trust. On
the Closing Date, Financed Student Loans (as defined in the Transfer
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and Servicing Agreement defined below) will have been transferred to the
Eligible Lender Trustee on behalf of the Trust by the Bank. The Notes will be
issued under an indenture dated as of March 27, 1997 (the "Master Indenture")
between the Trust and Bankers Trust Company, as indenture trustee ("Indenture
Trustee"), as supplemented by a related Second Terms Supplement (the "Second
Terms Supplement" and collectively with the Master Indenture, the "Indenture").
Upon issuance, the Notes will be secured by, among other things, Financed
Student Loans pledged to the Indenture Trustee and described in the Prospectus
(as defined in Section 3 below). This Agreement, the Transfer and Servicing
Agreement, the Indenture, the Administration Agreement and the Trust Agreement
shall collectively hereinafter be referred to as the "Basic Documents."
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Transfer and Servicing Agreement dated as of June 25,
1997, (the "Transfer and Servicing Agreement") among the Trust, the Bank and the
Eligible Lender Trustee.
1. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Bank agrees to cause the Trust to sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from the Trust: the
Class A-1 Notes, at a purchase price of 99.8456% of the principal amount of the
Class A-1 Notes; the Class A-2 Notes, at a purchase price of 99.7806% of the
principal amount of the Class A-2 Notes; the Class A-3 Notes, at a purchase
price of 99.7306% of the principal amount of the Class A-3 Notes; the Class A-4
Notes, at a purchase price of 99.7056% of the principal amount of the Class A-4
Notes; the Class A-5 Notes, at a purchase price of 99.6806% of the principal
amount of Class A-5 Notes; the Class A-6 Notes, at a purchase price of 99.6656%
of the principal amount of the Class A-6 Notes; the Class A-7 Notes, at a
purchase price of 99.6056% of the principal amount of the Class A-7 Notes; the
Class A-8 Notes, at a purchase price of 99.7556% of the principal amount of the
Class A-8 Notes; the Class A-9 Notes, at a purchase price of 99.6056% of the
principal amount of the Class A-9 Notes; and the Class B Notes at a purchase
price of 99.5056% of the principal amount of the Class B Notes, the respective
principal amounts of each Class of Notes set forth opposite the names of the
Underwriters in Schedule I hereto. In addition, the Bank agrees to pay Smith
Barney Inc. a structuring fee equal to $515,000.
(b) Delivery to the Representative of and payment for the
Notes shall be made at the office of Stroock & Stroock & Lavan LLP, 180 Maiden
Lane, New York, New York 10038, at 10:00 A.M., New York City time, on June 25,
1997 (the "Closing Date").
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The place of such closing and the Closing Date may be varied by agreement
between the Representative and the Bank.
The Notes will be delivered by the Bank to the Representative
for the respective accounts of the Underwriters against payment of the purchase
price therefor to or upon the order of the Bank in Federal Funds, by wire, or
such other form of payment as to which the parties may agree. Each Class of
Notes will be evidenced by a single global security in definitive form and/or by
additional definitive securities, and will be registered, in the case of the
global Classes of Notes, in the name of Cede & Co. as nominee of The Depository
Trust Company ("DTC"), and in the other cases, in such names and in such
denominations as the Representative shall request prior to 1:00 p.m., New York
City time, no later than the business day preceding the Closing Date. The Notes
to be delivered to the Representative shall be made available to the
Representative in New York City for inspection and packaging not later than 9:30
a.m., New York City time, on the business day next preceding the Closing Date.
2. Offering by the Underwriters.
(a) It is understood that, after the Registration Statement
becomes effective, the Underwriters propose to offer the Notes for sale to the
public (which may include selected dealers) as set forth in the Prospectus. The
Underwriters agree not to offer or sell the Notes in any state or jurisdiction
where registration, qualification or any filing to effect any exemption is
required under such state's or jurisdiction's securities or Blue Sky laws,
except where, with the consent of the Bank (which may be withheld in the Bank's
sole discretion), such registration, qualification or filing has been
completed. To the extent the Underwriters engage in overallotment, stabilizing
transactions, syndicate covering transactions and penalty bids, the
Underwriters agree that such activities shall be in accordance with Regulation
M under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) Each Underwriter severally represents and agrees that (i)
it has not offered or sold and will not offer or sell any Notes to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purpose of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied and will comply with all applicable provisions of the
Financial Services Act of 1986 with respect to anything done by it in relation
to the Notes in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on, and will only issue or pass on, in the United
Kingdom any document
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received by it in connection with the issue of the Notes to a person who is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or to a person to whom such document may
otherwise lawfully be issued, distributed or passed on.
3. Representations and Warranties of the Bank. The Bank
represents and warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (No. 333-25433),
including a prospectus and such amendments thereto as may have been required to
the date hereof, relating to the Notes and the offering thereof has been filed
with the Securities and Exchange Commission (the "SEC") and such registration
statement, as amended, has become effective under the Securities Act of 1933,
as amended (the "Act"); such registration statement, as amended, including all
information (if any) deemed to be a part of such registration statement as of
the Effective Time (as defined below) pursuant to Rule 430A under the Act, and
including the exhibits thereto and any material incorporated by reference
therein, and the prospectus relating to the sale of the Notes offered thereby
constituting a part thereof, as amended or supplemented, are respectively
referred to herein as the "Registration Statement" and the "Prospectus"; and
the conditions to the use of a registration statement on Form S-3 under the
Act, as set forth in the General Instructions to Form S-3, have been satisfied
with respect to the Registration Statement. For purposes of this Agreement,
"Effective Time" means (x) if the Bank has advised the Representative that it
does not propose to amend the Registration Statement, the date and time as of
which the Registration Statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this Agreement,
was declared effective by the SEC, or (y) if the Bank has advised the
Representative that it proposes to file an amendment or post-effective
amendment to the Registration Statement, the date and time as of which the
Registration Statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the SEC. "Effective
Date" means the date of the Effective Time.
(b) On the Effective Date, the Registration Statement, and at
the time of the filing of the Prospectus pursuant to Rule 424(b), the
Registration Statement and the Prospectus, conformed, in all material respects
to the requirements of the Act, the rules and regulations of the SEC (the
"Rules and Regulations") and the Trust Indenture Act of 1939, as amended, and
the rules and regulations thereunder (the "Trust Indenture Act"), and in the
case of the Registration Statement, did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
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therein or necessary to make the statements therein not misleading and, in the
case of the Prospectus, did not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
on the date of this Agreement, the Registration Statement and the Prospectus
conforms in all material respects to the requirements of the Act, the Rules and
Regulations and the Trust Indenture Act, and the Registration Statement does not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; the Prospectus does not include any untrue statement of material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing does not apply to statements
in or omissions from the Registration Statement or the Prospectus based upon
written information furnished to the Bank by any Underwriter specifically for
use therein.
(c) The SEC has not issued and, to the best knowledge of the
Bank, is not threatening to issue any order preventing or suspending the use of
the Registration Statement.
(d) This Agreement has been duly authorized, executed and
delivered by the Bank. The execution, delivery and performance of this
Agreement and the issuance and sale of the Notes and compliance with the terms
and provisions hereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, the organizational
documents or by-laws of the Bank or any agreement or instrument to which the
Bank is a party or by which the Bank is bound or to which any of the properties
of the Bank is subject which could reasonably be expected to have a material
adverse effect on the transactions contemplated herein.
(e) The Bank is duly organized and validly existing as a
national banking association with the power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, except for such power and authority the
absence of which would not have a material adverse effect on the Bank or its
ability to consummate the transactions contemplated hereby.
(f) There are no legal or governmental proceedings pending
or, to the knowledge of the Bank, threatened, against the Bank, or to which
Bank or any of its properties is subject, of a character required to be
disclosed in the Prospectus that are not disclosed in the Prospectus.
(g) All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory
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body, administrative agency or other government instrumentality required to be
obtained, effected or given by the Bank in connection with the execution and
delivery by the Bank of this Agreement and the performance by the Bank of the
transactions expressly contemplated by this Agreement, have been duly obtained,
effected or given and are in full force and effect, except such as may be
required by the blue sky laws of any jurisdiction in connection with the sale
and distribution of the Notes for which no representation is being given.
(h) The Bank has all requisite corporate power and authority
to execute and deliver this Agreement and carry out its terms.
(i) The Bank is not required to register as an "investment
company" under the Investment Company Act of 1940, as amended (the "1940 Act")
by reason of the issuance of the Notes.
(j) The representations and warranties made by the Bank as
Transferor in Section 3.1 and Section 6.1 of the Transfer and Servicing
Agreement will be true and correct in all material respects at the time made
and on and as of the Closing Date.
(k) Other than as contemplated by this Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party that is
entitled to receive from the Bank or any of its subsidiaries any brokerage or
finder's fee or other fee or commission as a result of any of the transactions
contemplated by this Agreement.
4. Agreements of the Bank. The Bank agrees with the
Underwriters as follows:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Bank will file the Prospectus, properly
completed, with the SEC pursuant to and in accordance with subparagraph (1)
(or, if applicable and if consented to by the Representative, subparagraph (4))
of Rule 424(b) not later than the earlier of (i) the second business day
following the execution and delivery of this Agreement and (ii) the fifth
business day after the Effective Date. The Bank will advise the Representative
promptly of any such filing pursuant to Rule 424(b). The Bank will advise the
Representative promptly of any proposal to amend or supplement the Registration
Statement or the Prospectus and will not effect such amendment or
supplementation without the consent of the Representative prior to the Closing
Date, and thereafter will not effect any such amendment or supplementation to
which the Representative reasonably objects; provided, however, except for the
Current Report on Form 8-K described in Section 4(m), no consent of the
Representative shall be required in connection
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with any filing made pursuant to the Exchange Act and the rules and regulations
promulgated thereunder; the Bank will also advise the Representative promptly of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information; and
the Bank will also advise the Representative promptly of the effectiveness of
the Registration Statement (if the Effective Time is subsequent to the execution
of this Agreement) and of any amendment or supplement to the Registration
Statement or the Prospectus and of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or known threat of any proceeding for that purpose and the Bank will
use its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting of any issued stop order.
(b) If, at any time when the Prospectus relating to the Notes
is required to be delivered under the Act, any event occurs as a result of
which such Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act or the Rules and Regulations, the Bank
promptly will prepare and file with the SEC, an amendment or supplement to such
Prospectus that will correct such statement or omission or an amendment that
will effect such compliance.
(c) The Bank will immediately inform the Representative (i)
of the receipt by the Bank or the Trust of any communication from the SEC or
any state securities authority concerning the offering or sale of the Notes and
(ii) of the commencement of any lawsuit or proceeding to which either the Bank
or the Trust is a party relating to the offering or sale of the Notes;
provided, however, with respect to the Trust, the Trust has so informed the
Bank to the extent the Bank did not receive such communication provided in
clause (i) or is not a party to the lawsuit or proceeding as provided in clause
(ii) and did not receive notice of such lawsuit.
(d) The Bank will furnish to the Underwriters, without
charge, copies of the Registration Statement (including all documents and
exhibits thereto or incorporated by reference therein), the Prospectus, and all
amendments and supplements to such documents relating to the Notes, in each
case in such quantities as the Underwriters may reasonably request.
(e) No amendment or supplement will be made to the
Registration Statement or Prospectus which the Representative shall not
previously have been advised or to which it shall reasonably object after being
so advised; provided, however,
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after the Closing Date, excluded from this provision shall be filings made
pursuant to the Exchange Act.
(f) The Bank will cooperate with the Representative and with
its counsel in connection with the qualification of, or procurement of
exemptions with respect to, the Notes for offering and sale by the Underwriters
and by dealers under the securities or Blue Sky laws of such jurisdictions as
any Underwriter may designate and to which the Bank shall consent (which
consent may be withheld in the Bank's sole discretion) and, in such
jurisdictions, will file or cause the Trust to file such consents to service of
process or other documents necessary or appropriate in order to effect such
qualification or exemptions; provided that in no event shall either of the Bank
or the Trust be obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Notes, in any jurisdiction where it is not now so subject.
(g) Subject to Section 2, the Bank and the Trust consent to
the use, in accordance with the securities or Blue Sky laws of such
jurisdictions in which the Notes are offered by the Underwriters and by
dealers, of the Prospectus furnished by the Bank.
(h) To the extent, if any, that the rating or ratings
provided with respect to the Notes by the rating agency or agencies that
initially rate a series of Notes is conditional upon the furnishing of
documents or the taking of any other actions by the Bank or the Trust, the Bank
shall cause to be furnished such documents and such other reasonable actions to
be taken.
(i) For two years from the Closing Date, the Bank will
furnish to the Representative (i) as soon as available, a copy of each document
relating to the Trust or the Notes required to be filed with the SEC pursuant
to the Exchange Act or any order of the SEC thereunder, and (ii) such other
information concerning the Bank or the Trust as the Representative may
reasonably request from time to time insofar as such information reasonably
relates to the Registration Statement or the transactions contemplated by the
Basic Documents.
(j) If this Agreement shall terminate or shall be terminated
after execution and delivery pursuant to any provisions hereof (otherwise than
by notice given by the Underwriter terminating this Agreement pursuant to
Section 8 or Section 9 hereof) or if this Agreement shall be terminated by the
Representative because of any failure or refusal on the part of the Bank to
comply with the terms or fulfill any of the conditions of this Agreement, the
Bank agrees to reimburse the
- 8 -
<PAGE> 9
Underwriters for all out-of-pocket expenses (including reasonable fees and
expenses of their counsel) reasonably incurred in connection herewith. In no
event shall the Bank or the Trust be liable to the Underwriters for loss of
anticipated profits from the transactions contemplated by this Agreement.
(k) The net proceeds from the sale of the Notes hereunder
will be applied substantially in accordance with the description set forth in
the Prospectus.
(l) Except as stated in this Agreement and in the Prospectus
the Bank has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes; it being understood and agreed that no such action by
any Underwriter shall be deemed an action of the Bank.
(m) Provided that the Bank has received the Computational
Materials (as defined in Section 8 below) within the time frame set forth in
Section 8, the Bank will cause such Computational Materials to be filed with
the SEC on a Current Report on Form 8-K (the "Current Report") not later than
the date on which the Prospectus is available for distribution to investors.
(n) For the period beginning on the date of this Agreement
and ending 90 days after the Closing Date, neither the Bank nor any trust
originated, directly or indirectly, by the Bank will, without the prior written
consent of the Representative, offer to sell or sell notes (other than the
Notes) collateralized by, or certificates evidencing an ownership interest in,
student loans; provided, however, that this shall not be construed to prevent
the sale of student loans by the Bank.
5. Indemnification and Contribution. (a) The Bank agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus, or in
any amendment or supplement thereto, or the preliminary prospectus dated June
16, 1997 (the "Preliminary Prospectus"), or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or
- 9 -
<PAGE> 10
omitted therefrom in reliance upon and in conformity with the information
relating to the Underwriter furnished in writing to the Bank by or on behalf of
any Underwriter through the Representative expressly for use in connection
therewith; provided, however, that the foregoing indemnity with respect to the
Prospectus or the Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased Notes, if such
person did not receive a copy of the Prospectus (as then amended or
supplemented) at or prior to the written confirmation of the sale of such Notes
to such person and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability. The
foregoing indemnity agreement shall be in addition to any liability which the
Bank may otherwise have.
(b) If any action, suit or proceeding shall be brought
against an Underwriter or any person controlling an Underwriter in respect of
which indemnity may be sought against the Bank, such Underwriter or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all reasonable fees and expenses. Such Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action, suit or proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
Underwriter or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel within a reasonable period
of time, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both the Underwriter or such
controlling person and the indemnifying parties and the Underwriter or such
controlling person shall have been advised by its counsel that representation
of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Underwriter or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for the Underwriter and controlling persons
- 10 -
<PAGE> 11
not having actual or potential differing interests with the Underwriter or among
themselves, which firm shall be designated in writing by the Underwriter, and
that all such fees and expenses shall be reimbursed on a monthly basis as
provided in paragraph (a) hereof. The indemnifying parties shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless the Underwriter and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment to the extent provided in
paragraph (a).
(c) Each Underwriter agrees severally but not jointly to
indemnify and hold harmless the Bank and its respective directors and officers,
and any person who controls the Bank within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the indemnity from
the Bank to such Underwriter set forth in paragraph (a) hereof, but only with
respect to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through the Representative expressly for use in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus. If any action, suit or
proceeding shall be brought against the Bank, any of its directors or officers,
or any such controlling person based on the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus and in respect of which indemnity may be sought against an
Underwriter pursuant to this paragraph (c), such Underwriter shall have the
rights and duties given to the Bank by paragraph (b) above (except that if the
Bank shall have assumed the defense thereof no Underwriter shall be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense, except as otherwise provided in paragraph (b) above),
and the Bank, its respective directors and officers, and any such controlling
person shall have the rights and duties given to such Underwriter by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Bank on the one hand and the applicable Underwriter on the other hand from
the
- 11 -
<PAGE> 12
offering of the Notes, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Bank on the one hand and such Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Bank on the one
hand and such Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes (before
deducting expenses) received by the Bank bear to the total underwriting
discounts and commissions received by such Underwriter. The relative fault of
the Bank on the one hand and such Underwriter on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Bank on the one hand or
by such Underwriter on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Bank and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined
by a pro rata allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 5, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Notes hereunder and, in the case of
Smith Barney Inc., plus the structuring fee referred to in Section 1. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 5 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Bank set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on
- 12 -
<PAGE> 13
behalf of an Underwriter, the Bank or any person controlling any of them or
their respective directors or officers, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, the Bank or any person controlling any of them or their
respective directors or officers, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 5.
6. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters to purchase the Notes hereunder are subject to
the following conditions:
(a) All actions required to be taken and all filings required
to be made by the Bank under the Act prior to the sale of the Notes shall have
been duly taken or made. At and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or, to
the knowledge of the Bank or the Underwriters, shall be threatened by the SEC.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Bank not
contemplated by the Registration Statement, which in the opinion of the
Representative, would materially adversely affect the market for the Notes, or
(ii) any event or development which makes any statement made in the
Registration Statement or Prospectus untrue in any material respect or which,
in the opinion of the Bank and its counsel or the Underwriters and their
counsel, requires the filing of any amendment to or change in the Registration
Statement or Prospectus in order to state a material fact required by any law
to be stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Registration Statement or
Prospectus to reflect such event or development would, in the opinion of the
Representative, materially adversely affect the market for the Notes.
(c) The Representative shall have received on the Closing
Date an opinion of Richards, Layton & Finger, special Delaware counsel for the
Trust, dated the Closing Date and addressed to the Underwriters, in form and
scope reasonably satisfactory to the Representative and its counse1 and
substantially in the form of Exhibit A hereto.
(d) The Representative shall have received on the Closing
Date opinions of Dean Blakey & Moskowitz, special counsel for the Bank, dated
the Closing Date and addressed to the Underwriters and B-2, in form and scope
reasonably
- 13 -
<PAGE> 14
satisfactory to the Representative and its counse1 and substantially in the form
of Exhibit B hereto.
(e) The Representative shall have received on the Closing
Date an opinion of Libby G. Fishman, Esq., General Counsel-Consumer Bank of PNC
Bank Corp., dated the Closing Date and addressed to the Underwriters, in form
and scope reasonably satisfactory to the Representative and its counse1 and
substantially in the form of Exhibit C hereto.
(f) The Representative shall have received on the Closing
Date an opinion of the Law Department of the Eligible Lender Trustee, dated the
Closing Date and addressed to the Underwriters, in form and scope reasonably
satisfactory to the Representative and its counse1 and substantially in the
form of Exhibit D hereto.
(g) The Representative shall have received on the Closing
Date an opinion of White & Case, counsel for the Indenture Trustee, dated the
Closing Date and addressed to the Underwriters, in form and scope satisfactory
to the Representative and its counse1 and substantially in the form of Exhibit
E hereto.
(h) The Representative shall have received on the Closing
Date an opinion of Stroock & Stroock & Lavan LLP, special counsel for the
Underwriters, dated the Closing Date, and addressed to the Underwriters, in
form and scope Satisfactory to the Representative and its counse1 and
substantially in the form of Exhibit F hereto.
(i) The Representative shall have received on the Closing
Date opinions of Mayer, Brown & Platt, counsel for the Bank, dated the Closing
Date and addressed to the Underwriters , in form and scope reasonably
satisfactory to the Representative and its counse1 and substantially in the
form of Exhibits G-1 and G-2 hereto.
(j) The Representative shall have received a letter dated the
date of delivery thereof (which shall be on or prior to the date of this
Agreement) from Ernst & Young LLP, and in form and substance reasonably
satisfactory to the Representative, to the effect that they have carried out
certain specified procedures, not constituting an audit, with respect to
certain information regarding the Financed Student Loans and setting forth the
results of such specified procedures.
(k) There shall not have been, since the respective dates as
of which information is given in the Registration Statement (or any amendment
or supplement thereto), except as may otherwise be stated therein or
contemplated thereby, any material adverse change in the condition (financial
or other), business, prospects, properties, net worth or results of
- 14 -
<PAGE> 15
operations of the Bank, and (ii) all the representations and warranties of the
Bank contained in this Agreement and the Basic Documents shall be true and
correct in all material respects on and as of the date hereof and on and as of
the Closing Date as if made on and as of the Closing Date and the Representative
shall have received a certificate, dated the Closing Date and signed by an
executive officer of the Bank, to the effect set forth in this Section 6(k) and
in Section 6(l) hereof.
(l) The Bank shall not have failed at or prior to the Closing
Date to have performed or complied in any material respect with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(m) The Representative shall have received by instrument
dated the Closing Date (at the option of the Representative), in lieu of or in
addition to the opinions referred to in clauses (c) through (i) of this Section
(6), the right to rely on opinions provided by such counsel and all other
counsel under the terms of the Basic Documents to Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Ratings Services ("Standard & Poor's") and
Fitch Investor's Service, L.P. ("Fitch").
(n) Moody's, Standard & Poor's and Fitch shall have rated the
Class A-1 Notes "P-1", "A-1+" and "F-1+", respectively, and each other Class of
the Class A Notes "Aaa", "AAA" and "AAA", respectively, and Moody's, Standard &
Poor's and Fitch shall have rated the Class B Notes at least "A2," "A" and "A,"
respectively, and there shall not have been any announcement by Moody's,
Standard & Poor's or Fitch that (i) it is downgrading any of its ratings
assigned to any Class of Notes or (ii) it is reviewing its ratings assigned to
any Class of Notes with a view to possible downgrading, or with negative
implications, or direction not determined.
(o) The Bank shall have furnished or caused to be furnished
to the Representative an executed copy of each of the Basic Documents, each
Guaranty Agreement, each Subservicing Agreement and such further certificates
and documents as the Representative shall have reasonably requested.
(p) The Representative shall have received evidence
satisfactory to it that, on or before the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the Secretary of State
of the Commonwealth of Pennsylvania reflecting the transfer of the interest of
the Bank in the Financed Student Loans to the Eligible Lender Trustee on behalf
of the Trust and the proceeds thereof to the Trust and in the offices of the
Secretaries of State of the States of Illinois and Delaware reflecting the
grant of the security interest by
- 15 -
<PAGE> 16
the Trust in the Financed Student Loans and the proceeds thereof to the
Indenture Trustee.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Representative and counsel for the
Representative.
7. Expenses. The Bank agrees to pay or to otherwise cause the
payment of the following costs and expenses and all other costs and expenses
incident to the performance by it and the Trust of their respective obligations
hereunder: (i) the preparation, printing or reproduction of the Registration
Statement, each Prospectus and each amendment or supplement to any of them,
this Agreement and each other Basic Document; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, each
Prospectus and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery
of definitive certificates for the Notes; (iv) the printing (or reproduction)
and delivery of this Agreement, the Blue Sky Memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection
with the offering of the Notes; (v) qualification of the Indenture under the
Trust Indenture Act; (vi) the qualification of the Notes for offer and sale
under the securities or Blue Sky laws of such states as the Bank and the
Representative may agree (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of any Blue Sky Memorandum prepared in
connection with such qualification); (vii) the fees and disbursements of (A)
the Bank's counsel, (B) the Representative's counsel (which fee shall not
exceed $225,000 without the consent of the Bank), (C) the Indenture Trustee and
its counsel, (D) the Eligible Lender Trustee, (E) the Depository Trust Company
in connection with the book-entry registration of the Notes, (F) Ernst & Young
LLP, accountants for the Bank and issuer of the letters described in Section
6(j), (G) Richards, Layton and Finger, Special Delaware Counsel to the Bank in
connection with the preparation of the opinion referred to in Section 6(c) and
(H) Dean Blakey & Moskowitz, special counsel to the Bank in connection with the
preparation of the opinion referred to in Section 6(d); (viii) the fees charged
by Moody's, Standard & Poor's and Fitch for rating the Notes and (ix) the
reasonable travel and other out-of-pocket expenses incurred by the
Representative in connection with the transactions contemplated hereby.
8. Computational Materials. (a) Not later than 10:30 a.m. New
York City time, on the Business Day before the date on which the Current Report
relating to the Notes is
- 16 -
<PAGE> 17
required to be filed by the Bank with the SEC pursuant to Section 4(m) hereof,
each Underwriter shall deliver to the Bank a complete copy of all materials, if
any, provided by such Underwriter to prospective investors in such Notes which
constitute "Computational Materials" within the meaning of the no-action letter
dated May 20, 1994 issued by the Division of Corporation Finance of the SEC to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated,
and Kidder Structured Asset Corporation, the no-action letter dated May 27, 1994
issued by the Division of Corporation Finance of the SEC to the Public
Securities Association and the no-action letter of February 17, 1995 issued by
the SEC to the Public Securities Association (collectively, the "Kidder/PSA
Letters") and the filing of which is a condition of the relief granted in such
letters (such materials being the "Computational Materials").
Each Underwriter severally and not jointly represents and
warrants to and agrees with the Bank, as of date hereof and as of the Closing
Date, that the Computational Materials furnished to the Bank by such
Underwriter pursuant to Section 8(a) constitute (either in original, aggregated
or consolidated form) all of the materials furnished to prospective investors
in the Notes by such Underwriter prior to the time of delivery thereof to the
Bank that are required to be filed with the SEC with respect to the Notes in
accordance with the Kidder/PSA Letters and such Computational Materials comply
with the requirements of the Kidder/PSA Letters.
Notwithstanding the foregoing, such Underwriter makes no
representation or warranty with respect to statements in any Computational
Materials relating to the Financed Student Loans which were furnished by or on
behalf of the Bank to such Underwriter.
9. Default by One of the Underwriters. If any of the
Underwriters shall fail at the Closing Date to purchase the Notes which it is
obligated to purchase hereunder (the "Defaulted Notes"), the remaining
Underwriter (the "Non-Defaulting Underwriter") shall have the right, but not
the obligation, within one (1) Business Day thereafter, to make arrangements to
purchase all, but not less than all, of the Defaulted Notes upon the terms
herein set forth; if, however, the Non-Defaulting Underwriters shall have not
completed such arrangements within such one (1) Business Day period, then this
Agreement shall terminate without liability on the part of the Non-Defaulting
Underwriters.
No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting
- 17 -
<PAGE> 18
Underwriter or the Bank shall have the right to postpone the Closing Date for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
10. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
Until such time as this Agreement shall have become effective, it may be
terminated by the Bank, by notifying the Representative, or by the
Representative, by notifying the Bank.
Any notice under this Section 8 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject
to termination in the absolute discretion of the Representative, without
liability on the part of any Underwriter, by notice to the Bank, if prior to
the Closing Date, (i) trading in securities generally on the New York Stock
Exchange shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York state authorities, (iii) there shall
have occurred any outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in the reasonable judgment of the Representative,
impracticable or inadvisable to commence or continue the offering of the Notes
on the terms set forth in the Prospectus, or to enforce contracts for the
resale of the Notes by the Underwriters, (iv) legislation shall be enacted by
the Congress of the United States or a decision by a court of the United States
or the Tax Court of the United States shall be rendered, or an officially
published ruling, regulation, proposed regulation or official statement by or
on behalf of the Treasury Department of the United States, the Internal Revenue
Service or any other governmental agency shall be made, with respect to federal
taxation upon revenues or other income of the general character expected to be
pledged under the Indenture or upon interest received on securities of the
general character of the Notes, or which would have the effect of changing,
directly or indirectly, the federal income tax consequences of interest on
securities of the general character of the Notes in the hands of the holders
thereof, which in the opinion of counsel to the Representative materially
affects the market price of the Notes, or (v) legislation shall be enacted by
the States of Delaware or Illinois or the Commonwealth of Pennsylvania, or a
decision by a court of competent jurisdiction of the States of Delaware or
Illinois or the Commonwealth of Pennsylvania or any administrative tribunal of
the States of Delaware or Illinois or the Commonwealth of Pennsylvania or other
governmental agency or
- 18 -
<PAGE> 19
department thereof shall be rendered with respect to taxation by the States of
Delaware or Illinois or the Commonwealth of Pennsylvania or any of their
political subdivisions upon revenues or other income of the general character
expected to be pledged under the Indenture or upon interest received on
securities of the general character of the Notes, or which would have the effect
of changing, directly or indirectly, the tax consequences under the States of
Delaware or Illinois or the Commonwealth of Pennsylvania tax law of interest on
securities of the general character of the Notes in the hands of the holders
thereof, which in the opinion of counsel to the Representative materially
affects the market price of the Notes. Notice of such termination may be given
to the Bank, by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. Information Furnished by the Underwriter. The statements
set forth in the second sentence of the fourth from last paragraph on the cover
page, the second sentence under the subsection "Risk Resulting from Limited
Liquidity of the Notes" under the heading "Risk Factors" and under the heading
"Underwriting" in the Preliminary Prospectus and the Prospectus constitute the
only information furnished by or on behalf of the Underwriters as such
information is referred to in Sections 3(b) and 5 hereof, and each Underwriter
confirms that such statements relating to such Underwriter are correct.
13. Representation of Underwriters. The Representative shall
act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representative will be binding upon all
the Underwriters.
14. Miscellaneous. Except as otherwise provided in Sections
4, 10 and 11 hereof, notice given pursuant to any provision of this Agreement
shall be in writing and shall be delivered (i) if to the Bank, two copies, one
to PNC Bank, National Association, 2600 Liberty Avenue, Suite 200, Pittsburgh,
Pennsylvania 15222, Attention: Mr. John Peters; facsimile: (800) 300-2213, with
a copy to PNC Bank, National Association, One PNC Plaza, 249 Fifth Avenue,
Pittsburgh, Pennsylvania 15222, Attention: Helen Pudlin, Esq.; Senior Vice
President and General Counsel; facsimile (412) 762-5920, (ii) if to the Trust,
to the Eligible Lender Trustee, at the Corporate Trust Office of the Eligible
Lender Trustee and (iii) if to the Representative, to Smith Barney Inc., 390
Greenwich Street, New York, NY 10013, Attention: Debt Organization Group;
facsimile (212) 723-8853.
This Agreement has been and is made solely for the benefit of
the Underwriters and the Bank, their respective directors, officers, trustees
and controlling persons referred to in Section 5 hereof and their respective
successors and
- 19 -
<PAGE> 20
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Notes in its status
as such purchaser.
15. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
without giving effect to the choice of laws or conflict of laws principles
thereof.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof or thereof shall have been executed and delivered on behalf of each
party hereto.
16. Effect on Letter Agreement. This Agreement
supersedes that certain letter agreement dated as of March 18, 1997, between
Smith Barney Inc. and PNC Bank Corp., except for Section 5 thereof relating to
the confidentiality obligations of such parties which survives.
- 20 -
<PAGE> 21
Please confirm that the foregoing correctly sets forth the
agreement among the Bank, the Trust and the Underwriters.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By: /s/ John J. Peters
---------------------
Name: John J. Peters
Title: Vice President
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee on
behalf of the Trust,
By: /s/ Steve M. Husbands
---------------------
Name: Steve M. Husbands
Title: Assistant Vice President
Confirmed as of the date
first above mentioned.
SMITH BARNEY INC.
By: /s/ Paul Sheldon
--------------------
Name: Paul Sheldon
Title: M.D. Managing Director
Acting on behalf of itself
and as Representative of the
several Underwriters.
Confirmed with respect to
Section 16 only as of the date
first above mentioned.
PNC BANK CORP.
By: /s/ Paul L. Audet
---------------------
Name: Paul L. Audet
Title: Senior Vice President
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<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
Underwriters
------------
Principal Balance
-----------------------------------------------------------------------
Smith Barney PNC Capital
Class of Notes Inc. Markets, Inc. Total
- -------------- ------------ ------------- --------------
<S> <C> <C> <C>
Class A-1 Notes............................. $ 45,000,000 $ 45,000,000 $ 90,000,000
Class A-2 Notes............................. $ 53,500,000 $ 53,500,000 $ 107,000,000
Class A-3 Notes............................. $ 53,500,000 $ 53,500,000 $ 107,000,000
Class A-4 Notes............................. $ 51,000,000 $ 51,000,000 $ 102,000,000
Class A-5 Notes............................. $ 47,000,000 $ 47,000,000 $ 94,000,000
Class A-6 Notes............................. $ 36,250,000 $ 36,250,000 $ 72,500,000
Class A-7 Notes............................. $ 60,500,000 $ 60,500,000 $ 121,000,000
Class A-8 Notes............................. $ 87,500,000 $ 87,500,000 $ 175,000,000
Class A-9 Notes............................. $ 62,725,000 $ 62,725,000 $ 125,450,000
Class B Notes............................... $ 18,025,000 $ 18,025,000 $ 36,050,000
Total....................................... $ 515,000,000 $ 515,000,000 $1,030,000,000
============= ============= ==============
</TABLE>
<PAGE> 23
The following Exhibits to the Underwriting Agreement have been omitted:
Exhibit A Form of Opinion of Richards, Layton & Finger
Exhibit B Form of Opinions of Dean Blakey & Moskowitz
Exhibit C Form of Opinion of Libby G. Fishman, Esq.
Exhibit D Form of Opinion of the Law Department of the Eligible
Lender Trustee
Exhibit E Form of Opinion of White & Case
Exhibit F Form of Opinion of Stroock & Stroock & Lavan LLP
Exhibits G-1 Form of Opinions of Mayer, Brown & Platt
and G-2
<PAGE> 1
Exhibit 4.1
Amendment No. 1 dated as of June 25, 1997 to the INDENTURE dated as of
March 27, 1997, between PNC Student Loan Trust I, a Delaware business trust
(the "Issuer"), Bankers Trust Company, as indenture trustee and not in its
individual capacity (the "Indenture Trustee").
WHEREAS, the Issuer desires to, among other things, issue an additional
Series of Notes; and
WHEREAS, in connection with the issuance of such additional Series of
Notes the Issuer desires to make certain amendments to the Indenture dated as of
March 27, 1997 between the Issuer and the Indenture Trustee (the "Indenture").
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
Capitalized but undefined terms used herein shall have the meanings set
forth in the Original Indenture.
SECTION 1. Amendment. The Indenture is hereby amended to read in its
entirety as set forth on Exhibit A.
SECTION 2. Effect of Headings and Table of Contents. Section headings
are for convenience only and shall not affect the construction hereof.
SECTION 3. Governing Law. This Amendment No. 1 shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
SECTION 4. Counterparts. This Amendment No. 1 may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
1
<PAGE> 2
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Amendment No. 1 to the Indenture to be duly executed by their respective
officers, thereunto duly authorized and duly attested, all as of the day and
year first above written.
PNC Student Loan Trust I
By: THE FIRST NATIONAL BANK
OF CHICAGO
not in its individual
capacity but solely as
Eligible Lender Trustee,
By: /s/ Steve M. Husbands
----------------------
Name: Steve M. Husbands
Title: Assistant Vice President
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee,
By: /s/ Linda A. Rakolta
----------------------
Name: Linda A. Rakolta
Title: Vice President
2
<PAGE> 3
EXHIBIT A
---------
INDENTURE
between
PNC STUDENT LOAN TRUST I,
as Issuer
and
BANKERS TRUST COMPANY
not in its individual capacity, but
solely as Indenture Trustee
Dated as of March 27, 1997
as Amended as of June 25, 1997
<PAGE> 4
CROSS-REFERENCE TABLE 1
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) ........................................................ 6.11
(a)(2) ........................................................ 6.11
(a)(3) ........................................................ 6.10
(a)(4) ........................................................ N.A. 2
(a)(5) ........................................................ 6.11
(b) ........................................................ 6.8;
6.10; 6.11
(c) ........................................................ N.A.
311(a) ........................................................ 6.12
(b) ........................................................ 6.12
(c) ........................................................ N.A.
312(a) ........................................................ 7.1;
7.2(a)
(b) ........................................................ 7.2(b)
(c) ........................................................ 7.2(c)
313(a) ........................................................ 6.6
(b) ........................................................ 6.6
(c) ........................................................ 11.5
(d) ........................................................ 6.6
314(a) ........................................................ 3.9; 7.3
(b) ........................................................ 3.6
(c) ........................................................ 2.9; 4.1
11.1
(d) ........................................................ 2.9;
11.1
(e) ........................................................ 11.1
(f) ........................................................ 3.9
315(a) ........................................................ 6.1
(b) ........................................................ 6.5
(c) ........................................................ 6.1
(d) ........................................................ 6.1
(e) ........................................................ 5.13
316(a)(1)(A) ........................................................ 5.11
(a)(1)(B) ........................................................ 5.12
(a)(2) ........................................................ N.A.
(b) ........................................................ 5.7
(c) ........................................................ 1.1
317(a) ........................................................ 5.3
(b) ........................................................ 3.3
318(a) ........................................................ 11.7
</TABLE>
- --------
1 Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
2 N.A. means Not Applicable.
-i-
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I DEFINITIONS AND USAGE............................................................1
SECTION 1.1. Definitions and Usage............................................................1
SECTION 1.2. Incorporation by Reference of
Trust Indenture Act..............................................................1
ARTICLE II THE NOTES........................................................................2
SECTION 2.1. Form.............................................................................2
SECTION 2.2. Execution, Authentication and Delivery...........................................2
SECTION 2.3. Notes Issuable in Series and Classes; ...........................................3
SECTION 2.4. Denominations....................................................................6
SECTION 2.5. Temporary Notes .................................................................6
SECTION 2.6. Registration; Registration of Transfer and Exchange..............................6
SECTION 2.7. Mutilated, Destroyed, Lost or Stolen Notes.......................................8
SECTION 2.8. Persons Deemed Owner.............................................................9
SECTION 2.9. Payments of Principal and Interest...............................................9
SECTION 2.10. Cancellation....................................................................11
SECTION 2.11. Authentication and Delivery of Notes ...........................................12
SECTION 2.12. Release of Collateral...........................................................16
SECTION 2.13. Restrictions on Transfer .......................................................16
SECTION 2.14. Book-Entry Notes ...............................................................17
SECTION 2.15. Notices to Clearing Agency .....................................................18
SECTION 2.16. Definitive Notes ...............................................................19
ARTICLE III COVENANTS ......................................................................19
SECTION 3.1. Payment to Noteholders .........................................................19
SECTION 3.2. Maintenance of Office or Agency ................................................20
SECTION 3.3. Money for Payments To Be Held in Trust .........................................20
SECTION 3.4. Existence ......................................................................22
SECTION 3.5. Protection of Indenture Trust Estate ...........................................22
SECTION 3.6. Opinions as to Indenture Trust Estate ..........................................23
SECTION 3.7. Performance of Obligations; Servicing of
Financed Student Loans..........................................................23
SECTION 3.8. Negative Covenants .............................................................25
SECTION 3.9. Annual Statement as to Compliance ..............................................25
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.............................26
SECTION 3.11. Successor or Transferee.........................................................28
SECTION 3.12. No Other Business...............................................................28
SECTION 3.13. No Borrowing....................................................................28
SECTION 3.14. Obligations of Master Servicer and Administrator................................28
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities...............................29
SECTION 3.16. Capital Expenditures............................................................29
SECTION 3.17. Restricted Payments.............................................................29
</TABLE>
1
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 3.18. Notice of Events of Default.....................................................29
SECTION 3.19. Further Instruments and Acts....................................................30
ARTICLE IV SATISFACTION AND DISCHARGE......................................................30
SECTION 4.1. Satisfaction and Discharge of Indenture.........................................30
SECTION 4.2. Application of Trust Money......................................................31
SECTION 4.3. Repayment of Moneys Held by Paying Agent........................................31
ARTICLE V REMEDIES........................................................................32
SECTION 5.1. Events of Default...............................................................32
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment..............................33
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.......34
SECTION 5.4. Remedies; Priorities............................................................37
SECTION 5.5. Optional Preservation of the Financed
Student Loans...................................................................39
SECTION 5.6. Limitation of Suits.............................................................39
SECTION 5.7. Unconditional Rights of Noteholders To
Receive Principal and Interest..................................................40
SECTION 5.8. Restoration of Rights and Remedies..............................................40
SECTION 5.9. Rights and Remedies Cumulative..................................................41
SECTION 5.10. Delay or Omission Not a Waiver..................................................41
SECTION 5.11. Control by Noteholders..........................................................41
SECTION 5.12. Waiver of Past Defaults.........................................................42
SECTION 5.13. Undertaking for Costs...........................................................42
SECTION 5.14. Waiver of Stay or Extension Laws................................................43
SECTION 5.15. Action on Notes.................................................................43
SECTION 5.16. Performance and Enforcement of Certain Obligations..............................43
ARTICLE VI THE INDENTURE TRUSTEE...........................................................44
SECTION 6.1. Duties of Indenture Trustee.....................................................44
SECTION 6.2. Rights of Indenture Trustee.....................................................46
SECTION 6.3. Individual Rights of Indenture Trustee..........................................47
SECTION 6.4. Indenture Trustee's Disclaimer..................................................47
SECTION 6.5. Notice of Defaults..............................................................47
SECTION 6.6. Reports by Indenture Trustee to Noteholders.....................................47
SECTION 6.7. Compensation and Indemnity......................................................48
SECTION 6.8. Replacement of Indenture Trustee................................................49
SECTION 6.9. Successor Indenture Trustee by Merger...........................................50
SECTION 6.10. Appointment of Co-Trustee or
Separate Trustee................................................................50
SECTION 6.11. Eligibility; Disqualification ..................................................52
SECTION 6.12. Preferential Collection of Claims Against Issuer................................52
ARTICLE VII Noteholders' Lists and Reports..................................................52
SECTION 7.1. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders..........53
</TABLE>
2
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 7.2. Preservation of Information; Communications
to Noteholders..................................................................53
SECTION 7.3. Fiscal Year of Issuer...........................................................53
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................................54
SECTION 8.1. Collection of Money.............................................................54
SECTION 8.2. Trust Accounts..................................................................54
SECTION 8.3. General Provisions Regarding Accounts...........................................55
SECTION 8.4. [Reserved]......................................................................56
SECTION 8.5. [Reserved]......................................................................56
ARTICLE IX........................................................................................56
SECTION 9.1. Supplemental Indentures Without Consent
of Noteholders..................................................................56
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.............................58
SECTION 9.3. Execution of Supplemental Indentures............................................59
SECTION 9.4. Effect of Supplemental Indenture................................................60
SECTION 9.5. Conformity with Trust Indenture Act.............................................60
SECTION 9.6. Reference in Notes to Supplemental
Indentures......................................................................60
ARTICLE X .......[INTENTIONALLY OMITTED].........................................................61
ARTICLE XI .......MISCELLANEOUS...................................................................61
SECTION 11.1. Compliance Certificates and Opinions, etc.......................................61
SECTION 11.2. Form of Documents Delivered to
Indenture Trustee...............................................................63
SECTION 11.3. Acts of Noteholders.............................................................64
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies.............................................................64
SECTION 11.5.. Notices to Noteholders; Waiver..................................................65
SECTION 11.6.. Alternate Payment and Notice Provisions.........................................66
SECTION 11.7.. Conflict With Trust Indenture Act...............................................66
SECTION 11.8.. Effect of Headings and Table of Contents........................................66
SECTION 11.9.. Successors and Assigns..........................................................66
SECTION 11.10. Separability....................................................................67
SECTION 11.11. Benefits of Indenture...........................................................67
SECTION 11.12. Legal Holidays..................................................................67
SECTION 11.13. Governing Law...................................................................67
SECTION 11.14. Counterparts....................................................................67
SECTION 11.15. Recording of Indenture..........................................................67
SECTION 11.16. Trust Obligations...............................................................68
SECTION 11.17. No Petition.....................................................................68
SECTION 11.18. Inspection......................................................................68
SECTION 11.19. Usury...........................................................................69
APPENDIX A .......DEFINITIONS AND USAGE............................................................3
</TABLE>
3
<PAGE> 8
INDENTURE dated as of March 27, 1997, as amended as of June 25, 1997,
between PNC STUDENT LOAN TRUST I, a Delaware business trust (the "Issuer"),
Bankers Trust Company, as trustee and not in its individual capacity (the
"Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more series (each a "Series") of its Notes (the
"Notes"), issuable as provided in this Indenture. Each Series of such Notes
will be issued only under a separate supplement to this Indenture duly executed
and delivered by the Issuer and the Indenture Trustee and limited to the amount
therein described. All covenants and agreements made by the Issuer herein are
for the benefit and security of the holders of the Notes. The Issuer is
entering into this Indenture and the Trustee is accepting the trusts created
hereby, for good and valuable consideration; the receipt and sufficiency of
which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
ARTICLE I
Definitions and Usage
---------------------
SECTION 1.1. Definitions and Usage. Except as otherwise specified
herein or as the context may otherwise require, capitalized terms used but not
defined herein are defined in Appendix A hereto (as supplemented to the extent
indicated therein, by the provisions of the Terms Supplement for a particular
Series), which Appendix A also contains rules as to usage that shall be
applicable herein.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
1
<PAGE> 9
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
ARTICLE II
The Notes
---------
SECTION 2.1. Form. The Notes and the Indenture Trustee's certificate
of authentication shall be in substantially the form set forth in Exhibit A,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture or any Terms Supplement and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A are part of the terms of this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
2
<PAGE> 10
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes executed by the Issuer to the
Trustee for authentication; and the Trustee shall authenticate and deliver such
Notes as provided in this Indenture and not otherwise.
Each Note shall be dated as of the date specified in the related Terms
Supplement.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3. Notes Issuable in Series and Classes; General Provisions
with Respect to Principal and Interest Payments. The Notes may, as provided
herein, be issued in one or more Series, each of which Series may consist of
only one Class of Notes or may be divided into two or more Classes, and shall be
designated generally as the "PNC Student Loan Trust I Asset Backed Notes" of the
Issuer, with such further particular designations added or incorporated in such
title for the Notes of any particular Series or Class as the Issuer may
determine.
The principal of each Note shall be payable on the related Final
Maturity Date unless the unpaid principal of such Note becomes due and payable
at an earlier date by declaration of acceleration or otherwise.
Payments of principal of a Class of Notes of a Series shall be made
pro rata among all Outstanding Notes of such Class, without preference or
priority of any kind.
Unless otherwise provided in the Terms Supplement, all payments made
with respect to any Note shall be applied first to the interest then due and
payable on such Note and then to the principal thereof. Unless otherwise
provided in the related Terms Supplement, all computations of interest accrued
on any Note shall be made on the basis of the actual number of days elapsed in
each applicable Interest Period divided by 360.
Interest on the unpaid principal amount of each Outstanding Note of a
Class shall be payable on each Distribution Date for such Class at the Class
Interest Rates applicable to such Note for the related Interest Periods.
3
<PAGE> 11
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes of a Series
have become or been declared due and payable following an Event of Default and
such acceleration of maturity and its consequences have not been rescinded and
annulled and the provisions of Section 5.5 are not applicable to such Series,
then payments of principal of and interest on such Notes shall be made in
accordance with Section 5.4.
Each Note shall bear upon the face thereof the designation so selected
for the Series and Class to which it belongs. All Notes of the same Series and
Class shall be identical in all respects except for the denominations and dates
thereof. All Notes of all Classes within any one Series at any time
Outstanding shall be identical except for differences among the Notes of the
different Classes within such Series as specified in the applicable Terms
Supplement.
Each Series of Notes shall be created by a Terms Supplement authorized
by the Trust Agreement and establishing the terms and provisions of such
Series, specifying the Financed Student Loans and any other property to be
included in the Indenture Trust Estate therefor and Granting such Indenture
Trust Estate as security for all previously issued and Outstanding Series of
Notes and the Series of Notes created thereby. The several Series may differ
in respect of any of the following matters:
(1) designation of the Series;
(2) dating of the Notes of the Series and Interest Period;
(3) the number of Classes and the maximum aggregate principal
amount of Notes of each such Class which may be issued;
(4) Class Interest Rate for each Class and the method for
determining such Class Interest Rate, including the applicable Interest Period;
(5) Final Maturity Date on which the final installment of
principal of each Class is to be paid;
(6) place or places for the payment of the final installment of
principal or the manner in which Noteholders will be informed of such place or
places;
(7) denominations;
4
<PAGE> 12
(8) whether the Notes of such Series may be authenticated by an
Authenticating Agent, and, if so, the Person appointed as Authenticating Agent
for such Series;
(9) Record Dates and Distribution Dates for each Class;
(10) the amount, if any, to be deposited at the Closing Date in
each of the Collection Account, the Expense Account, the Reserve Account and any
other account;
(11) the amount, if any, to be deposited in the Reserve Account,
the Requisite Amount of the Specified Reserve Account Requirement for such
Series, the circumstances under which withdrawals from such Reserve Account are
permitted or required to be made and whether a Qualified Letter of Credit may be
delivered to the Indenture Trustee in lieu of a cash deposit in such Reserve
Account, and, if so, the standards applicable to such Qualified Letter of
Credit;
(12) whether any surplus funds in the Collection Account for such
Series are required to be used to restore amounts on deposit in the Reserve
Account to the minimum amount, if any, required to be on deposit therein;
(13) any items required to be delivered to the Indenture Trustee on
the date of issuance of such Series pursuant to Section 2.11;
(14) whether or the extent to which Eligible Substitute Financed
Student Loans may be substituted for Financed Student Loans and the conditions
relating thereto including what constitutes an Eligible Substitute Financed
Student Loan;
(15) provisions with respect to terms defined in Appendix A for
which the definitions set forth therein require or permit further specification
in the related Terms Supplement;
(16) restrictions, if any, on the transferability of the Notes of
such Series;
(17) providing for swap agreements; and
(18) any other provisions expressing or referring to the terms and
conditions upon which the Notes of that Series are to be issued under this
Indenture which are not in conflict with the provisions of this Indenture.
5
<PAGE> 13
In authorizing the issuance of any Series, the Issuer, by Issuer
Order, shall determine and specify all matters in respect of the Notes of such
Series set forth in clauses (1) to (18), inclusive, to the extent applicable,
and shall also determine and specify the forms of Notes of such Series, in
compliance with the terms of this Article II.
SECTION 2.4. Denominations. The Notes shall be issuable only as
registered Notes in the denominations prescribed by the terms of the Terms
Supplement creating the particular Series.
SECTION 2.5. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, photocopied, mimeographed or otherwise produced, of
the tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of the same Series and
Class and of authorized denominations. Until so exchanged, the temporary Notes
shall in all respects be entitled to the same benefits under this Indenture as
Definitive Notes of the same Series and Class.
SECTION 2.6. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be the "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. Upon any resignation of any
Note Registrar, the Issuer shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the
6
<PAGE> 14
Indenture Trustee prompt written notice of the appointment of such Note
Registrar and of the location, and any change in the location, of the Note
Registrar, and the Indenture Trustee shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof, and the Indenture
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an officer thereof as to the names and addresses of the
Noteholders and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any authorized
denominations, of the same class and a like aggregate principal amount.
At the option of the Noteholder, Notes may be exchanged for other
Notes of any authorized denominations, of the same Series and Class and a like
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, the Notes which the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Restrictions on transfer, if any, of a Series or Class of Notes shall
be set forth herein and in the related Terms Supplement.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by the
Noteholder thereof or such Noteholder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements includes membership
or participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in
7
<PAGE> 15
substitution for, STAMP, all in accordance with the Exchange Act.
No service charge shall be made to a Noteholder for any registration
of transfer or exchange of Notes, but the Indenture Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
SECTION 2.7. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Series, tenor,
aggregate initial principal amount and Class bearing a number not
contemporaneously outstanding; provided, however, that if any such destroyed,
lost or stolen Note, but not a mutilated Note, shall have become or within 15
days shall be due and payable, instead of issuing a replacement Note, the Issuer
may pay such destroyed, lost or stolen Note when so due or payable. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Noteholder thereof of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
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Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone in
accordance with the provisions of this Indenture and the applicable Terms
Supplement.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.8. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of, interest, if any, on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.9. Payments of Principal and Interest. (a) Any installment
of interest or principal payable on any Notes of any Series which is punctually
paid or duly provided for by the Issuer on the applicable Distribution Date
shall be paid to the Person in whose name such Note (or one or more Predecessor
Notes) is registered at the close of business on the Record Date for such
Distribution Date by either (i) check mailed to such Person's address as it
appears in the Note Register on such Record Date, or (ii) wire transfer in
immediately available funds to the account of such Noteholders at a bank or
other entity having appropriate facilities therefore, if such Noteholder shall
have provided the Note Registrar appropriate written instructions (which may be
standing instructions) at least five business days prior to such Distribution
Date; provided, however, the final installment of principal payable with respect
to such Note shall be payable as provided in subsection (b) of this Section 2.9.
(b) All reductions in the principal amount of a Note (or one or
more Predecessor Notes) effected by payments of installments of principal made
on any Distribution Date shall be binding upon all Holders of such Note and of
any Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, whether or not such payment is noted on such Note.
The final installment of principal of each
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Note shall be payable only upon presentation and surrender thereof on or after
the Distribution Date therefor to the Indenture Trustee.
(c) The principal of each Class of Notes shall be payable in
installments on each Distribution Date as provided in the applicable Terms
Supplement. Notwithstanding the foregoing, the entire unpaid principal amount
of each Class of Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing, if
either the Indenture Trustee or the Noteholders of the Notes representing not
less than a majority of the Outstanding Amount of the Notes have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2.
All principal payments on each Class of Notes shall be made to the Noteholders
of such Class entitled thereto as provided in the applicable Terms Supplement.
The Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the
Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be
mailed or transmitted by facsimile prior to such final Distribution Date and
shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment.
(d) If the Issuer defaults in a payment of interest on any Class of
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Class Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the persons who
are Noteholders of such Class on a subsequent special record date, which date
shall be at least five Business Days prior to the payment date. The Issuer
shall fix or cause to be fixed any such special record date and payment date,
and, at least 15 days before any such special record date, the Issuer shall
mail to each Noteholder of such Class a notice that states the special record
date and the amount of defaulted interest to be paid.
(e) Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture, upon registration of transfer of or in
exchange for or in lieu of any other Note, shall carry the rights to unpaid
principal and interest that were carried by such other Note. Any checks mailed
pursuant to this Section 2.9 and returned undelivered shall be held in
accordance with Section 3.3.
(f) Unless otherwise provided in the relevant Terms Supplement,
not later than each Determination Date relating to
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each Note Distribution Date for a Series of Notes, the Administrator shall
prepare and deliver to the Issuer, the Eligible Lender Trustee and the Indenture
Trustee a statement (a "Distribution Date Statement") with respect to the
following Distribution Date setting forth:
(i) the amount of the distribution allocable to interest on each
Class of Notes, together with the interest rates applicable with respect
thereto;
(ii) the amount of the distribution allocable to principal of each
Class of Notes;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the aggregate outstanding principal balance of each Class of
Notes of such Distribution Date, after giving effect to payments allocated to
principal reported under clause (ii) above;
(v) the amount of the Servicing Fee allocated to the Master
Servicer, the amount of the Administration Fee allocated to the Administrator,
the amount of the Indenture Trustee Fee allocated to the Indenture Trustee, and
the amount of the Eligible Lender Trustee Fee allocated to the Eligible Lender
Trustee, respectively, with respect to such Collection Period; and
(vi) the amount of the aggregate Realized Losses, if any, for such
Collection Period.
SECTION 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer or exchange shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly canceled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
All canceled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time, unless the Issuer shall direct by an Issuer Order that they be returned to
it and so long as such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
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SECTION 2.11. Authentication and Delivery of Notes. Notes of any one or
more Series may from time to time be executed by the Issuer and delivered to the
Indenture Trustee for authentication, and thereupon the same shall be
authenticated and delivered by the Indenture Trustee, upon Issuer Request and
upon receipt by the Indenture Trustee of the following:
(a) an Issuer Order authorizing the execution, authentication and
delivery of such Notes by the Issuer and specifying the Series, the Classes
within such Series, the Final Maturity Date of each Class, the principal amount
and the Class Interest Rate and the method of determining such Class Interest
Rate, of each Class of such Notes to be authenticated and delivered;
(b) in case the Notes to be authenticated and delivered are of any
Series not theretofore created, an appropriate Terms Supplement, accompanied by
an Issuer Order authorizing such Terms Supplement (and, in the case of the first
Series to be authenticated and delivered hereunder, authorizing this Indenture),
designating the new Series to be created and prescribing, consistent with the
applicable provisions of this Indenture, the terms and provisions relating to
the Notes of such Series;
(c) Opinions of Counsel addressed to the Indenture Trustee
substantially to the effect that:
(i) the Eligible Lender Trustee is an "eligible lender" under the
terms of the Higher Education Act, has corporate power to execute and deliver
the Trust Agreement, the Trust Agreement authorizes the Issuer to execute and
deliver the Terms Supplement relating to such Notes (and, in the case of the
first Series to be authenticated and delivered hereunder, this Indenture), and
to issue such Notes, and the Issuer has duly taken all necessary action under
the Trust Agreement for those purposes;
(ii) the Issuer is a Delaware business trust;
(iii) assuming due execution and delivery thereof by the Indenture
Trustee, this Indenture and the related Terms Supplement, as executed and
delivered by the Issuer, are the valid, legal and binding obligations of the
Issuer, enforceable in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and such counsel need express no opinion
with respect
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to the availability of equitable remedies, and the execution of such Terms
Supplement is authorized or permitted by Section 9.1 of this Indenture;
(iv) the Notes then applied for, when issued, delivered,
authenticated and paid for, will be the valid, legal and binding obligations of
the Issuer, entitled to the benefits of this Indenture and the related Terms
Supplement, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and such counsel need express no opinion with respect to the availability of
equitable remedies;
(v) the Issuer has Granted to the Indenture Trustee a lien and
first perfected security interest in all of its right, title and interest in
each such Financed Student Loan (with priority being based solely on UCC
searches conducted, as specified in the opinion and only as to priority over
other security interests perfected by UCC filings);
(vi) the Trust Agreement authorizes the Issuer to Grant the
Indenture Trust Estate to the Indenture Trustee as security for the Notes of
such Series;
(vii) the Terms Supplement delivered to the Indenture Trustee with
such Opinion of Counsel subjects the Financed Student Loans securing such Series
and all previously issued and Outstanding Series and all proceeds therefrom and
the Pledged Accounts or Funds for such Series and all previously issued and
Outstanding Series to the lien and security interest of this Indenture;
(viii) such action has been taken with respect to delivery of
possession of the Indenture Trust Estate and with respect to the recording and
filing of this Indenture, the Terms Supplement for such Series, any other
indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements as is necessary
to perfect a first priority security interest in the Indenture Trust Estate for
such Series and all previously issued and Outstanding Series, with either the
details of such action being recited therein, or the absence of any such action
being necessary to make such lien and security interest effective being stated
therein; and, with any recording, filing, re-recording and re-filing of this
Indenture, the Terms Supplement for such Series, any other indentures
supplemental hereto and any other requisite documents and any execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien
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and security interest created by this Indenture and the related Terms
Supplements in the Indenture Trust Estate for such Series and all previously
issued and Outstanding Series until April 30 of the year in which the first
Opinion of Counsel with respect to such Series is required to be delivered under
Section 3.6 being described therein;
(ix) this Indenture and the Terms Supplement for such Series have
been duly qualified under the TIA, or that no qualification of this Indenture or
the related Terms Supplement under the TIA is necessary; the execution of the
Terms Supplement for such Series requires the requalification of this Indenture
under the TIA, or that no requalification of the Indenture under the TIA is
necessary by virtue of the execution of such Terms Supplement; and
(x) no authorization, approval or consent of any governmental body
having jurisdiction over the Issuer which has not been obtained by the Issuer is
required for the valid issuance and delivery of the Notes, except such as may be
required by the blue sky laws of any jurisdiction in connection with the sale
and distribution of the Notes for which no opinion need be given.
(d) an Officer's Certificate of the Administrator on behalf
of the Issuer stating substantially to the effect that:
(i) all instruments furnished to the Indenture Trustee in
connection with such Notes conform to the requirements of this Indenture and
constitute all the documents required to be delivered hereunder for the
Indenture Trustee to authenticate and deliver the Notes then applied for;
(ii) all conditions precedent provided for in this Indenture
relating to the authentication and delivery of the Notes applied for have been
complied with;
(iii) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, the Trust
Agreement, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any order
of any court or administrative agency entered in any proceeding to which the
Issuer is a party or by which it may be bound or to which it may be subject;
(iv) the Issuer is the owner of each Financed Student Loan
securing such Series and any previously issued
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Series, has not assigned any interest or participation in any such Financed
Student Loan (or, if any such interest or participation has been assigned, it
has been released) and has the right to Grant each such Financed Student Loan to
the Indenture Trustee; and
(v) Except with respect to the first Series of Notes,
attached hereto are true and correct copies of letters signed by each Rating
Agency rating such new Series of Notes confirming that the Notes of such new
Series have been rated in the rating category set forth in the applicable Terms
Supplement by such Rating Agencies and that the issuance of such new Series will
not adversely effect the ratings assigned by such Rating Agencies to any
previously issued Class of Notes the Outstanding.
(e) Unless any of the requirements set forth herein shall be deleted
by the related Terms Supplement, an Officer's Certificate of the Administrator
on behalf of the Issuer stating that all of the Financed Student Loans and any
other assets securing such Series and all previously issued and Outstanding
Series:
(i) satisfy each of the requirements established for such
Financed Student Loans in the related Terms Supplement; and
(ii) have been endorsed as provided in the Transfer and
Servicing Agreement;
(f) Cash in the amount, if any, required by the terms of the related
Terms Supplement to be deposited in the Collection Account and held by the
Indenture Trustee and applied in accordance with the terms hereof or as
otherwise provided in the related Series Supplement;
(g) Cash, Eligible Investments or (if permitted by the
related Terms Supplement) a Qualified Letter of Credit or any other assets
specified in or permitted by the related Terms Supplement in the respective
amounts, if any, required by the terms of the related Terms Supplement to be
maintained in the Reserve Account and held by the Indenture Trustee;
(h) An executed counterpart of the Terms Supplement; and
(i) Such other documents, certificates, instruments or
opinions as may be reasonably required by the terms of the Terms Supplement
creating such Series of Notes.
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SECTION 2.12. Release of Collateral. Except as otherwise permitted by
Section 11.1 and the terms of the Basic Documents, the Indenture Trustee shall
release property from the lien of this Indenture and the related Terms
Supplement only upon receipt of an Issuer Request accompanied by an Officer's
Certificate of the Issuer, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
SECTION 2.13. Restrictions on Transfer. THE PROVISIONS OF THIS
SECTION SHALL APPLY ONLY TO A CLASS OF NOTES ISSUED IN A TRANSACTION NOT
REGISTERED UNDER THE SECURITIES ACT (the "Non-Registered Notes"). Except as
otherwise set forth in a Terms Supplement, the Notes may not be offered or sold
except to institutional "accredited investors" (as defined in Rule 501(a)(1)-(3)
under the Securities Act and "qualified institutional buyers" as defined in Rule
144A under the Securities Act in reliance on an exemption from the registration
requirements of the Securities Act. The Non-Registered Notes will not have been
registered or qualified under the Securities Act, or any state securities law.
No transfer, sale, pledge or other disposition of any Non-Registered Note shall
be made unless such disposition is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws, or is made in a transaction which does
not require such registration or qualification. In the event that a transfer is
to be made in reliance upon an exemption from the Securities Act, the Indenture
Trustee may require, in order to assure compliance with the Securities Act, that
the Noteholders prospective transferee certify to the Indenture Trustee in
writing the facts surrounding such disposition. Unless the Indenture Trustee
requests otherwise, such certification shall be substantially in the form of
Exhibit B hereto. In the event that such certification of facts does not on its
face establish the availability of an exemption under the Securities Act, the
Trustee may require an opinion of counsel satisfactory to it that such transfer
may be made pursuant to an exemption from the Securities Act, which opinion of
counsel shall not be an expense of the Indenture Trustee or of the Trust.
(b) Except as otherwise set forth in a Terms Supplement, each
Non-Registered Note will bear a legend substantially to the following effect:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
THIS NOTE, AGREES THAT THIS NOTE
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MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1)-(3) UNDER THE ACT OR A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL
BUYER, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS NOTE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1) EMPLOYEE BENEFIT
PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS OR KEOGH PLANS
SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL ACCOUNTS) WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH PLAN'S ARRANGEMENTS
OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR AN INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO OR FIRST CHICAGO
DELAWARE INC.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY."
SECTION 2.14. Book-Entry Notes Unless otherwise provided in the
related Terms Supplement, the Notes, upon original issuance, will be issued in
the form of typewritten Notes representing the Book-Entry Notes, to be delivered
to The Depository Trust Company, the initial Clearing Agency, by, or on behalf
of, the Issuer. Such Notes shall initially be registered on the Note Register
in the name of Cede & Co., the nominee of the initial Clearing Agency, and no
Note Owner will receive a Definitive Note (as defined below) representing such
Note Owner's interest in such Note, except as provided in Section 2.16. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Note Owners pursuant to Section 2.16:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Indenture Trustee may deal with the Clearing Agency for
all purposes (including the payment of principal of and interest and other
amounts on the Notes) as the authorized representative of the Note Owners;
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(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the Clearing
Agency Participants pursuant to the Note Depository Agreements. Unless and
until Definitive Notes are issued pursuant to Section 2.16, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
participants and receive and transmit payments of principal of and interest and
other amounts on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders of Notes evidencing
a specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
SECTION 2.15. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.16, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency.
SECTION 2.16. Definitive Notes. Unless the Terms Supplement provides
otherwise, and if (i) the Administrator advises the Indenture Trustee in writing
that the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Notes, and the Administrator is unable to
locate a qualified successor, or (ii) the Administrator at its option advises
the Indenture Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, a Servicer Default or an Administrator Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency (which shall then
notify the Indenture Trustee) in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the
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best interests of the Note Owners, then the Indenture Trustee will cause the
Clearing Agency to notify all Note Owners, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the holders of the Definitive Notes as Noteholders.
ARTICLE III
Covenants
---------
SECTION 3.1. Payment to Noteholders. The Issuer will pay or cause to
be duly and punctually paid, from the property of the Issuer, the principal of
and interest on the Notes of each Series in accordance with the terms of such
Notes, this Indenture and the related Terms Supplement and Transfer and
Servicing Agreement. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain in the Borough of Manhattan, the City of New York, the State of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Indenture Trustee
of the location, and of any change in the location, of any such office or
agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the City of New York)
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where the Notes may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; provided, however, that (i) no
such designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, the State of New York for the purposes set forth in the preceding
paragraph, (ii) presentations or surrenders of Notes for payment may be made
only in the City of New York, the State of New York and (iii) any designation of
an office or agency for payment of Notes shall be subject to Section 3.3. The
Issuer will give prompt written notice to the Indenture Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 3.3. Money for Payments To Be Held in Trust. As provided in
Section 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts distributed from the Collection
Account or any other Trust Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so distributed from the Collection Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the Notes)
in the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in
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trust for the payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request; and the Noteholder thereof
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The
Indenture Trustee shall also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including mailing
notice of such repayment to Noteholders whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for
each such Noteholder).
SECTION 3.4. Existence. The Issuer will keep in full effect its
existence and rights as a trust under the laws of the
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State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence and
rights under the laws of such other jurisdiction) and will obtain and preserve
its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Financed Student Loans and each
other instrument or agreement included in the Indenture Trust Estate.
SECTION 3.5. Protection of Indenture Trust Estate. The Issuer will
from time to time execute and deliver all such supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interests (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture or any Terms Supplement;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture Trust Estate and
the rights of the Indenture Trustee and the Noteholders in such Indenture Trust
Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
SECTION 3.6. Opinions as to Indenture Trust Estate. On or before April
30 in each calendar year, beginning with the first calendar year commencing more
than three months after the Closing Date, the Administrator, on behalf of the
Issuer, shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the
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details of such action or stating that in the opinion of such counsel no such
action is necessary to maintain such lien and security interest. Such Opinion
of Counsel shall also describe the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until April 30 in
the following calendar year.
SECTION 3.7. Performance of Obligations; Servicing of Financed Student
Loans. (a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Indenture Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the related Terms Supplement or Transfer
and Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Master Servicer and the Administrator to assist
the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe in all material
respects all its obligations and agreements contained in this Indenture, the
other Basic Documents and in the instruments and agreements included in the
Indenture Trust Estate, including filing or causing to be filed all UCC
financing statements and continuation statements required to be filed by the
terms of this Indenture and the related Terms Supplement and Transfer and
Servicing Agreement in accordance with and within the time periods provided for
herein and therein. Except as otherwise expressly provided therein, the Issuer
shall not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the consent of the Indenture Trustee.
(d) Without derogating from the absolute nature of the assignment
Granted to the Indenture Trustee under any Terms Supplement or the rights of the
Indenture Trustee hereunder, the
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Issuer agrees that it will not, without the prior written consent of the
Noteholders of at least a majority in Outstanding Amount of the Notes of each
Series then outstanding, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of (i) any portion of the Trust Estate, or, as
applicable, (ii) the Basic Documents, except to the extent otherwise provided in
the related Transfer and Servicing Agreement, or waive timely performance or
observance by the Master Servicer, the Administrator, the Seller, the Issuer or
the Eligible Lender Trustee under the related Transfer and Servicing Agreement;
provided, however, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, distributions that
are required to be made for the benefit of the Noteholders or the
Counterparties, or (ii) reduce the aforesaid percentage of the Notes which are
required to consent to any such amendment, without the consent of the
Noteholders of all the Outstanding Notes and the Counterparties affected
thereby. If any such amendment, modification, supplement or waiver should be so
consented to by the Indenture Trustee or such Noteholders and Counterparties,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture Trustee
may deem necessary or appropriate in the circumstances.
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or any other
Basic Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Indenture
Trust Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal
of or interest on any of the Notes (other than amounts properly withheld from
such payments under the Code or applicable state law) or assert any claim
against any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Indenture Trust Estate;
(iii) except as contemplated by the Basic Documents, dissolve or
liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this Indenture or
any Terms Supplement to be impaired, or permit the lien of this Indenture and
any Terms Supplement to be amended, hypothecated, subordinated, terminated or
discharged, or permit
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any Person to be released from any covenants or obligations with respect to the
Notes under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture and any Terms Supplement) to
be created on or extend to or otherwise arise upon or burden the Indenture Trust
Estate or any part thereof or any interest therein or the proceeds thereof
(other than tax liens and other liens that arise by operation of law, in each
case arising solely as a result of an action or omission of the related Obligor,
and other than as expressly permitted by the Basic Documents) or (C) permit the
lien of this Indenture and any Terms Supplement not to constitute a valid first
priority (other than with respect to any such tax or other lien) security
interest in the Indenture Trust Estate and the Swap Agreements.
SECTION 3.9. Annual Statement as to Compliance. The Administrator, on
behalf of the Issuer, will deliver to the Indenture Trustee, on or before April
30 following the first fiscal year of the Issuer that ends more than three
months after the Closing Date for a Series, and on or before April 30 of each
fiscal year thereafter, an Officer's Certificate of the Issuer stating that:
(i) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such Authorized
Officers' supervision; and
(ii) to the best of such Authorized Officers' knowledge, based on
such review, the Issuer has complied, in all material respects, with all
conditions and covenants under this Indenture throughout such year, or, if
there has been a default in the compliance in any material respect of any such
condition or covenant, specifying each such default known to such Authorized
Officers and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form reasonably satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture and
any Terms
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Supplement on the part of the Issuer to be performed or observed, all as
provided herein or therein;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing;
(iii) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse Federal or Illinois or
Delaware state income tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(iv) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate of the Issuer and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required by the
Exchange Act) in all material respects.
(b) Except as otherwise permitted by the Basic Documents, the Issuer
shall not consolidate with or merge into any entity or convey or transfer all or
substantially all its properties or assets, including those included in the
Indenture Trust Estate, to any Person, unless:
(i) the Person that the entity formed by or serving such
consolidation or merger or that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State, (B)
expressly assumes, by an indenture supplemental hereto, executed and delivered
to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and subordinate to the
rights of Noteholders and the Swap Counterparties, (D) unless otherwise provided
in such supplemental indenture, expressly agrees to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising
under or related to this Indenture
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and the Notes and (E) expressly agrees by means of such supplemental indenture
that such Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing;
(iii) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse Federal, Illinois or
Delaware state income tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(iv) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate of the Issuer and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any filing
required by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture and any Terms Supplement with the same effect as if
such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), PNC Student Loan Trust I will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery by the Issuer of written notice to the Indenture Trustee stating
that PNC Student Loan Trust I is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling, servicing and
managing Financed Student Loans and activities incidental thereto.
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SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes and such other obligations as are authorized
under the Basic Documents.
SECTION 3.14. Obligations of Master Servicer and Administrator. The
Issuer shall cause the Master Servicer and the Administrator to comply with the
applicable provisions of the Transfer and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Transfer and Servicing Agreement, this Indenture
or any Terms Supplement, the Issuer shall not make any loan or advance or credit
to, or guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or capability of
so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or dividends
of, or own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Eligible Lender Trustee or any owner of a beneficial interest in
the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer or the Administrator, (ii)
redeem, purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or
cause to be made, distributions to the Master Servicer, the Depositor, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders, the
Noteholders, the Administrator, and the Seller as contemplated by, and to the
extent funds are available for such purpose under the Transfer and Servicing
Agreement and the other Basic Documents.
SECTION 3.18. Notice of Events of Default. The Issuer shall give the
Indenture Trustee written notice of each Event of Default hereunder and each
default on the part of the Transferor
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of its obligations under the Transfer and Servicing Agreement, the Master
Servicer of its obligations under the Transfer and Servicing Agreement or the
Administrator of its obligations under the Transfer and Servicing Agreement or
the Administration Agreement. In addition, the Issuer shall deliver to the
Indenture Trustee, within five days after the foregoing notice of default,
written notice in the form of an Officer's Certificate of the Issuer of any
event which with the giving of notice and the lapse of time would become an
Event of Default under Section 5.1(iii), its status and what action the Issuer
is taking or proposes to take with respect thereto.
SECTION 3.19. Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Indenture Trust Estate
and the Swap Agreements except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes of
such Series, (iii) rights of Noteholders to receive payments of principal
thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13
and 3.15 of this Agreement, (v) the rights, obligations and immunities of the
Indenture Trustee hereunder (including the rights of the Indenture Trustee under
Section 6.7 and the obligations of the Indenture Trustee under Section 4.2), and
(vi) the rights of Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them,
and the Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when:
(A) either
(1) all Notes of such Series theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.7 and (ii) Notes for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
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discharged from such trust, as provided in Section 3.3) have been delivered to
the Indenture Trustee for cancellation; or
(2) all Notes of such Series not theretofore delivered to
the Indenture Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable within one year,
and the Issuer, in the case of (i) or (ii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Series of Notes not theretofore delivered to the Indenture
Trustee for cancellation when due to the applicable Final Maturity Date;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series and has paid or
caused to be paid all unpaid Trust Swap Payments; and
(C) in the case of (A)(2) above, the Issuer has delivered to
the Indenture Trustee an Officer's Certificate of the Issuer, an Opinion of
Counsel and (if required by the TIA or the Indenture Trustee) an Independent
Certificate from a firm of certified public accountants, each meeting the
applicable requirement of Section 11.1(a) and, subject to Section 11.2, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to such Series have
been complied with.
SECTION 4.2. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders of the particular Notes for
the payment of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Transfer and Servicing Agreement or required by law.
SECTION 4.3. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture
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with respect to a Series of Notes, all moneys then held by any Paying Agent
other than the Indenture Trustee under the provisions of this Indenture with
respect to such Series of Notes shall, upon demand of the Issuer, be paid to the
Indenture Trustee to be held and applied according to Section 3.3 and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
ARTICLE V
Remedies
--------
SECTION 5.1. Events of Default. "Event of Default," wherever used
herein, means, with respect to all Outstanding Notes issued hereunder, any one
of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note of
any Series or any Trust Swap Payment when the same becomes due and payable, and
such default shall continue for a period of five Business Days; or
(ii) default in the payment of the principal of any Note of any
Series when the same becomes due and payable, and such default shall continue
for a period of five Business Days; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture, or the Transfer and Servicing
Agreement (other than a covenant or agreement, a default in the observance or
performance of which is specifically dealt with elsewhere in this Section), or
any representation or warranty of the Issuer made in this Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the time
when the same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or to the
Issuer and the Indenture Trustee by the Noteholders of at least 25% of the
Outstanding Amount of the Outstanding Notes, a written notice specifying such
default or incorrect representation or warranty
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and requiring it to be remedied and stating that such notice is a notice of
Default hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part
of the Indenture Trust Estate in an involuntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of
the Indenture Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(v) the commencement by the Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Indenture Trust Estate, or the making by the
Issuer of any general assignment for the benefit of creditors, or the failure
by the Issuer generally to pay its debts as such debts become due, or the
taking of action by the Issuer in furtherance of any of the foregoing.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If
an Event of Default should occur and be continuing with respect to any Series of
Notes, then and in every such case the Indenture Trustee or Noteholders of Notes
representing no less than a majority of the Outstanding Amount of the
Outstanding Notes may declare all the Outstanding Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Indenture Trustee
if given by Noteholders), and upon any such declaration the unpaid principal
amount of all the Outstanding Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such a declaration of acceleration of maturity of
the Outstanding Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter in
this Article V provided, the Noteholders of Notes representing a majority of
the Outstanding Amount of the Outstanding Notes by written notice to the Issuer
and the Indenture Trustee, may, rescind and annul such declaration and its
consequences if:
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(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay
(A) all payments of principal of and interest on all
Outstanding Notes and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Outstanding Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Series of Notes when the same becomes due and
payable, and such default continues for a period of five days, or (ii) default
is made in the payment of the principal of or any installment of the principal
of any Series of Notes when the same becomes due and payable, and such default
continues for a period of five days the Issuer will, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on the Outstanding Notes for
principal and interest, with interest upon the overdue principal, and, to the
extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest at the respective Class Interest Rate and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums so due
and unpaid, and may prosecute such Proceeding to judgment or final decree, and
may enforce the same against the Issuer or other obligor upon any Series of
Notes and collect in the manner provided by law out of
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the property of the Issuer or other obligor upon any Series of Notes, wherever
situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Indenture Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable Federal or State bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of such Series of Notes
and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any
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election of a trustee, a standby trustee or Person performing similar functions
in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Outstanding Notes or the rights of any Noteholder
thereof or to authorize the Indenture Trustee to vote in respect of the claim
of any Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Outstanding Notes, may be enforced by the
Indenture Trustee without the possession of any of the Outstanding Notes or the
production thereof in any trial or other Proceedings relative thereto, and any
such action or Proceedings instituted by the Indenture Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Noteholders.
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(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
SECTION 5.4. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing in respect of the Outstanding Notes and the
Outstanding Notes have been declared due and payable and such declaration and
its consequences have not been rescinded and annulled, the Indenture Trustee may
do one or more of the following:
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Outstanding
Notes or under this Indenture with respect of Notes, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and any
other obligor upon such Outstanding Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Indenture Trust
Estate securing the Outstanding Notes;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Indenture Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.1(i) or (ii), unless (A) the
Noteholders of 100% of the Outstanding Amount of the Notes of such Series
consent thereto, (B) the proceeds of such sale or liquidation distributable to
the Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon the Outstanding Notes and any Trust Swap Payments for principal and
interest or (C) the Indenture Trustee determines that the Indenture Trust Estate
will not continue to provide sufficient funds for the payment of principal of
and interest on the Notes and any Trust Swap Payments as they would have become
due if the Outstanding Notes had not been declared due and payable, and the
Indenture Trustee
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obtains the consent of Noteholders of 66-2/3% of the Outstanding Amount of all
the Outstanding Class A Notes and 66-2/3% of the Outstanding Amount of the Class
B Notes and if the Swap Agreement is in effect, each Counterparty (so long as
such Counterparty is not in default under the Swap Agreement). In determining
such sufficiency or insufficiency with respect to clause (B) and (C), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the
Indenture Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under Section 6.7; and
SECOND: to Senior Noteholders and the Counterparties for amounts due
and unpaid on each Series of Senior Notes for interest and any Trust Swap
Payment, ratably, according to the amounts due and payable on each Series of
Senior Notes for interest;
THIRD: to Senior Noteholders for amounts due and unpaid on the Senior
Notes of each Series for principal, ratably according to the amounts due and
payable on the Senior Notes of each Series for principal;
FOURTH: to Subordinated Noteholders for amounts due and unpaid on each
Series of Subordinated Notes for interest, ratably, according to the amounts due
and payable on each Series of Senior Notes for interest;
FIFTH: to Subordinated Noteholders for amounts due and unpaid on the
Subordinated Notes of each Series for principal, ratably according to the
amounts due and payable on the Subordinated Notes of each Series for principal;
SIXTH: to the Eligible Lender Trustee for amounts due under the Trust
Agreement and the Transfer and Servicing Agreement.
SEVENTH: to the Issuer, for distribution in accordance with the terms
of the Transfer and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section.
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At least 15 days before such record date, the Issuer shall mail to each
Noteholder and the Indenture Trustee a notice that states the record date, the
payment date and the amount to be paid.
SECTION 5.5. Optional Preservation of the Financed Student Loans. If
the Outstanding Notes have been declared to be due and payable under Section 5.2
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Indenture Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Indenture Trust Estate. In determining whether to
maintain possession of the Indenture Trust Estate, the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Indenture Trust Estate for such
purpose.
SECTION 5.6. Limitation of Suits. No Noteholder of any Series shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) Noteholders of not less than 25% of the Outstanding Notes
have made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Noteholder or Noteholders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such Proceeding;
and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-
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day period by the Noteholders of a majority of the Outstanding Amount of the
Notes of such Series;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the Outstanding Amount of the
Outstanding Notes, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture based upon the larger percentage of Noteholders as of a date
certain.
SECTION 5.7. Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, any
Noteholder shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Noteholder.
SECTION 5.8. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or
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employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default shall impair any such right or remedy or constitute a waiver of
any such Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Noteholders of a majority
of the Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to
the Indenture Trustee to sell or liquidate the Trust Estate shall be by the
Noteholders of not less than 66-2/3% of the Outstanding Amount of the Notes of
each Series;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Indenture Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Noteholders of less than 66-2/3% of the Outstanding Amount of the Notes of each
Series to sell or liquidate the Trust Estate shall be of no force and effect;
(iv) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to
such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the time a judgment
or decree for payment of money due has been obtained as described in Section
5.2, the Noteholders of not less than a majority of the Outstanding Amount of
the Notes of a Series may
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waive any past Default hereunder and its consequences except a Default (a) in
payment when due of principal of or interest on any of the Outstanding Notes or
(b) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of each Noteholder. In the case of any such waiver,
the Issuer, the Indenture Trustee and the Noteholders shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease but to exist and be
deemed to have been cured and not to have occurred for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, not in their individual capacity but solely in their capacity as
Indenture Trustee or Eligible Lender Trustee, as applicable, and each Noteholder
by such Noteholder's acceptance of any Note shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Indenture
Trustee for any action taken, suffered or omitted by it as Indenture Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Indenture Trustee, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Outstanding Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of principal of
or interest on any Note on or after the respective due dates expressed in such
Note.
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the
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Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture and each Terms
Supplement nor any rights or remedies of the Indenture Trustee or the
Noteholders of any Series shall be impaired by the recovery of any judgment by
the Indenture Trustee against the Issuer or by the levy of any execution under
such judgment upon any portion of the Indenture Trust Estate or upon any of the
assets of the Issuer. Any money or property collected by the Indenture Trustee
shall be applied in accordance with Section 5.4(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller, the Administrator and the Master Servicer, as applicable, of each
of their obligations to the Issuer under or in connection with the Transfer and
Servicing Agreement (and with respect to the Administrator only, the
Administration Agreement) in accordance with the terms thereof, and to exercise
any and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Transfer and Servicing Agreement (and the
Administration Agreement) to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the part
of the Seller, the Administrator or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or secure
performance by the Seller, the Administrator or the Servicer of each of their
obligations under the Transfer and Servicing Agreement (and the Administration
Agreement).
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing) of the Noteholders of 66-2/3% of the Outstanding Amount of the
Outstanding Notes shall exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Seller, the Administrator or the Master
Servicer under or in connection with the Transfer and Servicing Agreement (and
the Administration Agreement), including the right or power to take any action
to compel or secure performance or observance by the Seller, the Administrator
or the Servicer of each of their obligations to the Issuer thereunder and to
give any
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consent, request, notice, direction, approval, extension or waiver under the
Transfer and Servicing Agreement (and the Administration Agreement) and any
right of the Issuer to take such action shall be suspended.
ARTICLE VI
The Indenture Trustee
---------------------
SECTION 6.1. Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is continuing, the Indenture Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and any
Terms Supplement and no implied covenants or obligations shall be read into
this Indenture or any Terms Supplement against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, that the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own bad faith, its own negligent failure to act or
its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
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accordance with a direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Transfer and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity satisfactory to it against any
loss, liability or expense is not reasonably assured to it; provided, however,
that the Indenture Trustee shall not refuse or fail to perform any of its
duties hereunder solely as a result of nonpayment of its normal fees and
expenses and further provided that nothing in this Section 6.1(g) shall be
construed to limit the exercise by the Indenture Trustee of any right or remedy
permitted under this Indenture or otherwise in the event of the Issuer's
failure to pay the Indenture Trustee's fees and expenses pursuant to Section
6.7.
(h) Except as expressly provided in the Basic Documents, the
Indenture Trustee shall have no obligation to administer, service or collect
the Financed Student Loans or to maintain, monitor or otherwise supervise the
administration, servicing or collection of the Financed Student Loans.
(i) In the event that the Indenture Trustee is the Paying Agent or
the Note Registrar, the rights and protections afforded to the Indenture
Trustee pursuant to this Indenture shall also be afforded to the Indenture
Trustee in its capacity as Paying Agent or Note Registrar.
(j) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provision of this Section and to the provisions of the
TIA.
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SECTION 6.2. Rights of Indenture Trustee. (a) The Indenture Trustee
may conclusively rely on any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Indenture Trustee need not
investigate any fact or matter stated in such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate of the Issuer or an Opinion of Counsel. The
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any willful misconduct or negligence on the part of, or
for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. Neither the Indenture
Trustee nor the Eligible Lender Trustee shall be responsible for and neither
makes any representation as to the validity or adequacy of this Indenture or the
Notes, neither shall be accountable for the Issuer's use of the proceeds from
the sale of the Notes, and neither shall be responsible for any statement of the
Issuer in the Indenture or in any document
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issued in connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Default occurs and is
continuing and if it is either actually known or written notice of the existence
thereof has been delivered to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail notice of the Default to each Noteholder and
the Swap Counterparty within 90 days after it occurs. Except in the case of a
Default in payment of principal of or interest on any Note, the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Noteholders. The
Indenture Trustee shall deliver to each Noteholder (and to each Person who was a
Noteholder at any time during the applicable calendar year) such information as
may be requested of it to enable such holder to prepare its Federal and state
income tax returns.
Within 60 days after each December 31 beginning with the December 31
following the first issuance of a Series of Notes, the Indenture Trustee shall
mail to each Noteholder a brief report as of such December 31 that complies with
TIA Section 313(a) if required by said section. The Indenture Trustee shall
also comply with TIA Section 313(b). If the issuance of any Series of Notes has
been registered under the Securities Act of 1933, as amended, a copy of each
such report required pursuant to TIA Sections 313(a) or (b) shall, at the time
of such transmission to Noteholders, be filed by the Indenture Trustee with the
Commission and with each securities exchange, if any, upon which the Notes of
such Series are listed, provided that the Issuer has previously notified the
Indenture Trustee of such listing.
SECTION 6.7. Compensation and Indemnity. The Issuer shall pay to the
Indenture Trustee for its services, a fee equal to the amount agreed to in
writing between the Indenture Trustee and the Administrator (the "Indenture
Trustee Fee") at the times set forth in Section 5.5 of the Transfer and
Servicing Agreement and shall or shall cause the Administrator from its own
funds to reimburse the Indenture Trustee for all reasonable out-of-pocket
expenses incurred or made by it in accordance with any provision of this
Indenture. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall or shall
cause the Administrator from its own funds to indemnify the Indenture Trustee,
its directors, officers, agents and employees against
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any and all loss, liability or expense (including reasonable attorneys' fees)
incurred by it in connection with the administration of this Trust and the
performance of its duties hereunder and the other Basic Documents. The
Indenture Trustee shall notify the Issuer and the Administrator promptly of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder and under the other Basic Documents.
The Issuer shall or shall cause the Administrator to defend the claim and the
Administrator shall not be liable for any separate legal fees and expenses of
the Indenture Trustee after it has assumed such defense; provided, however,
that, in the event that there may be a conflict between the positions of the
Indenture Trustee and the Administrator in conducting the defense of such claim,
the Indenture Trustee shall be entitled to separate counsel the reasonable fees
and expenses of which shall be paid by the Administrator from its own funds on
behalf of the Issuer. Neither the Issuer nor the Administrator need reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee or directors, officers, agents and employees to the extent any
such loss, liability or expenditure arises out of or results from the Indenture
Trustee's own willful misconduct, negligence or bad faith or a breach of the
representations, warranties and covenants of the Indenture Trustee in the
Agreement.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture or the resignation
or removal of the Indenture Trustee. When the Indenture Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or State bankruptcy, insolvency or similar law.
SECTION 6.8. Replacement of Indenture Trustee. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Issuer shall remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee;
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(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, and to the Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section
6.7 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11.
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In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Indenture Trust Estate, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Indenture Trust Estate, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including the
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holding of title to the Indenture Trust Estate or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of a co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Indenture and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it shall have a long term debt rating of Baa3 or better by Moody's or BBB or
better by Standard & Poor's Corporation. The Indenture Trustee shall at all
times meet the eligibility criteria for an "eligible lender" under the terms of
the Higher Education Act. The Indenture Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
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Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date for a Series and (ii) three months after the last Record Date for
such Series, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Noteholders of such Series as of
such Record Date, (b) at such other times as the Indenture Trustee may request
in writing, within 30 days after receipt by the Issuer of any such request, a
list of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as the Indenture
Trustee is the Note Registrar, no such list shall be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the name and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy
any list furnished to it as provided in such Section 7.1 upon receipt of a new
list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by a Noteholder to
receive a copy of the current list of Noteholders (whether or not made pursuant
to TIA Section 312(b)), the Indenture Trustee shall promptly notify the
Administrator thereof by providing to the Administrator a copy
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of such request and a copy of the list of Noteholders produced in response
thereto.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
(d) The Indenture Trustee shall furnish to the Noteholders promptly
upon receipt of a written request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Indenture Trustee under the Basic Documents.
SECTION 7.3. Fiscal Year of Issuer. Unless the Issuer otherwise
determines, the fiscal year of the Issuer shall end on December 31 of each year.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it on behalf of the
Noteholders pursuant to the Transfer and Servicing Agreement as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2. Trust Accounts. (a) On or prior to the Closing Date of
the first Series, the Indenture Trustee shall establish and maintain, in the
name of and with the Indenture Trustee, for the benefit of the Noteholders and
the Certificateholders, the Trust Accounts as provided in Section 5.1 of the
Transfer and Servicing Agreement with the exception of the Certificate
Distribution Account and the Certificate Monthly Advance Account.
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(b) On or before the Business Day preceding each Distribution Date,
all Available Funds for the related Class of Notes with respect to the
preceding Collection Period will be deposited in the Collection Account as
provided in Section 5.2 of the Transfer and Servicing Agreement. On or before
each Distribution Date for each Class of Notes, the appropriate Noteholders'
Distribution Amount, with respect to the preceding Collection Period will be
distributed from the Collection Account and any other Trust Account to the
Indenture Trustee (or any other Paying Agent) on behalf of the Noteholders as
provided in Sections 5.5 and 5.6 of the Transfer and Servicing Agreement.
(c) On each Distribution Date, the Indenture Trustee (or any other
Paying Agent) shall distribute all amounts received by it on behalf of
Noteholders of a particular Class pursuant to paragraph (b) above to such
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes of such Class as provided in the related Terms Supplement.
SECTION 8.3. General Provisions Regarding Accounts. (a) So long as no
Default shall have occurred and be continuing, all or a portion of the funds in
the Trust Accounts shall be invested in Eligible Investments and reinvested by
the Indenture Trustee upon Issuer Order, subject to the provisions of Section
5.1(b) of the Transfer and Servicing Agreement. All income or other gain from
investments of moneys deposited in the Trust Accounts with the exception of the
Certificate Distribution Account and the Certificate Monthly Advance Account
relating to a particular Series shall be deposited by the Indenture Trustee in
the Collection Account, and any loss resulting from such investments shall be
charged to such Trust Account.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by
10:00 a.m. New York City time (or such other time as may be agreed by the
Issuer and Indenture Trustee) on any Business Day; or (ii) a Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.2, or, if such Notes
shall have been declared due and payable following an Event of Default, amounts
collected or receivable from the
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Indenture Trust Estate are being applied in accordance with Section 5.5 as if
there had not been such a declaration; the Indenture Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts with
the exception of the Certificate Distribution Account and the Certificate
Monthly Advance Account in one or more Eligible Investments listed in paragraph
(7) of the definition of Eligible Investments.
SECTION 8.4. [Reserved]
SECTION 8.5. [Reserved]
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of any Noteholders or the Counterparties, the Issuer and
the Indenture Trustee, when authorized by an Issuer Order, from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act, to the extent this Indenture is
qualified under the Trust Indenture Act, as in force at the date of the
execution thereof),in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of each Terms Supplement, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or required
to be subjected to the lien of each Terms Supplement, or to subject to the lien
of each Terms Supplement additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Noteholders of all Notes or of the Notes of any Series, or to surrender any
right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may
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be inconsistent with any other provision herein or in any supplemental indenture
or to make any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided that such action
shall not materially adversely affect the interests of the Noteholders of any
Series;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be necessary
to facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;
(vii) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance, authentication and
delivery of any Series of Notes, as herein set forth, additional conditions,
limitations and restrictions thereafter to be observed;
(viii) to set forth the terms of, and security for, any Series
that has not theretofore been authorized by a Terms Supplement;
(ix) to modify or eliminate any of the terms of this
Indenture; provided, however, that
(A) such supplemental indenture shall expressly provide that
any such modifications or eliminations shall not be effective with respect to
any Outstanding Note of any Series created prior to the execution of such
supplemental indenture; and
(B) the Indenture Trustee may, in its discretion, decline to
enter into any such supplemental indenture which, in its opinion, would
adversely affect its own rights, duties or immunities; or
(C) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly
required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Noteholders under this Indenture; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder or the
Counterparties.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may
with the consent of the Noteholders of not less than a majority of the
Outstanding Amount of all the Notes in case Outstanding Notes of all Series are
to be affected, or with the consent of the Noteholders of not less than a
majority of the Outstanding Amount of the Notes to be affected in case one or
more, but less than all, of the Series of Outstanding Notes are to be affected,
by Act of such Noteholders delivered to the Issuer and the Indenture Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture relating to such Series or of modifying in any
manner the rights of the Noteholders of such Series under this Indenture;
provided, however, that so long as a Swap Agreement is in effect, no change
adversely affecting the rights of the Counterparty may be made without the
consent of such Counterparty (so long as such Counterparty is not in default
under such Swap Agreement) and further provided that no such supplemental
indenture shall, without the consent of the Noteholders of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount thereof or
the interest rate thereon, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Indenture Trust Estate to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which, any Note
or the interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the application
of funds available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates thereof;
(ii) reduce the percentage of the Outstanding Amount of the Notes
of any Series, the consent of the Noteholders of which is required for any such
supplemental indenture, or the
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consent of the Noteholders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
of any Series required to direct the Indenture Trustee to direct the Issuer to
sell or liquidate the Indenture Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be modified or
waived without the consent of the Noteholder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest
or;
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Indenture Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien of this Indenture on any property at any time
subject hereto or deprive any Noteholder of any Note of the security provided
by the lien of this Indenture.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders of the Notes of each Series to which such
amendment or supplemental indenture relates a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the
Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture,
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the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1
and 6.2, shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Indenture Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Indenture Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes of each Series affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect to the extent this Indenture is qualified under the Trust Indenture
Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX which relates to the Series of which such Notes are
a part may, and if required by the Indenture Trustee shall, bear a notation in
form approved by the Indenture Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Indenture Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture which relates to the
Series of which such Notes are a part may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes of such Series.
Notwithstanding anything to the contrary contained in this Article IX,
no supplemental indenture may be entered into unless the Rating Agency Condition
has been satisfied with respect to such supplemental indenture.
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ARTICLE X
[Intentionally Omitted]
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer, or the Administrator on
behalf of the Issuer, shall furnish to the Indenture Trustee (i) an Officer's
Certificate of the Issuer stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that such signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
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(b) (i) Other than any property released as contemplated by
clause (iii) below, whenever any property or securities are to be released from
the lien of this Indenture and the related Terms Supplements, the Issuer shall
also furnish to the Indenture Trustee an Officer's Certificate of the Issuer
certifying or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such release) of the property or securities
proposed to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate of the Issuer certifying or stating the opinion
of any signer thereof as to the matters described in clause (i) above, the
Issuer shall also furnish to the Indenture Trustee an Independent Certificate as
to the same matters if the fair value of the property or securities and of all
other property, other than property as contemplated by clause (iii) below, or
securities released from the lien of this Indenture and the related Terms
Supplements since the commencement of the then-current calendar year, as set
forth in the certificates required by clause (i) above and this clause (ii),
equals 10% or more of the Outstanding Amount of the Notes, but such certificate
need not be furnished in the case of any release of property or securities if
the fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes Outstanding.
(iii) Notwithstanding Section 2.12 or any other provisions of this
Section, the Issuer may, without compliance with the requirements of Section
2.12 or the other provisions of this Section, (A) collect, liquidate, sell,
service, convey, administer, manage or otherwise dispose of Financed Student
Loans as and to the extent permitted or required by the Basic Documents, (B)
make cash payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents and (C) convey to Seller those specified
Financed Student Loans as and to the extent permitted or required by and in
accordance with Section 2.3 of the Transfer and Servicing Agreement, so long as
the Issuer shall deliver to the Indenture Trustee every six months, commencing
six months after the first issuance of a Series of Notes, an Officer's
Certificate of the Issuer stating that all the dispositions of any portion of
the Indenture Trust Estate described in clauses (A), (B) or (C) above that
occurred during the immediately preceding six calendar months were applied in
accordance with the Basic Documents.
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SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of
the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however,
be construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
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<PAGE> 69
SECTION 11.3. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Noteholder of any Notes shall bind the Noteholder
of every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent,
filing, waiver or Act of Noteholders or other documents provided or permitted by
this Indenture or any of the Basic Documents, shall be in writing and if such
request, demand, authorization, direction, notice, consent, filing waiver or Act
of Noteholders is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing and mailed, first class, postage prepaid or sent by overnight
courier or by facsimile transmission to or with the Indenture Trustee at its
Corporate Trust Office, or
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<PAGE> 70
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, or via overnight courier to the Issuer addressed
to: PNC Student Loan Trust I, Attention: Corporate Trust Department, The First
National Bank of Chicago, One Federal Plaza, Chicago, Illinois 60670; with
a copy to the Administrator addressed to: PNC Bank, National Association,
2600 West Liberty Avenue, Pittsburgh, Pennsylvania, Attention: John Peters; or
at any other address previously furnished in writing to the Indenture Trustee by
the Issuer or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default.
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<PAGE> 71
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
and the Indenture Trustee may enter into any agreement with any Noteholder
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Noteholder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind the successors, co-trustees and agents (excluding
any legal representatives or accountants) of the Indenture Trustee.
SECTION 11.10. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Indenture Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
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<PAGE> 72
SECTION 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. This Indenture, each Terms Supplement
and the Notes shall be construed in accordance with the laws of the State of New
York, without reference to its conflict of law provisions, and the obligations,
rights and remedies of the parties hereunder and thereunder shall be determined
in accordance with such laws.
SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Issuer or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligations. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Eligible
Lender Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Eligible Lender Trustee in its
individual capacity or (ii) any partner, owner, beneficiary, custodian, officer,
director, employee or agent of the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity, any holder or owner of a beneficial interest
in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Eligible Lender Trustee in
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Eligible Lender Trustee have
no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary
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<PAGE> 73
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the
Eligible Lender Trustee shall be subject to, and entitled to the benefit of, the
terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that prior to the date which is one year and a day after to the
termination of this Indenture, they will not at any time institute against the
Issuer, or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or State
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee, during
the Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees and Independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested; provided
however that the Indenture Trustee may only cause the books of the Issuer to be
audited on an annual basis, unless there occurs an Event of Default hereunder.
The Indenture Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine with advice of counsel and after consultation with the Issuer and
Administrator that such disclosure is consistent with its obligations hereunder.
Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known through no fault of the Indenture Trustee, (ii)
disclosure of any and all information (which makes reference to the Issuer, the
Administrator or the PNC Student Loan Trust I transaction) obtained by the
Indenture Trustee from sources (other than the
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<PAGE> 74
Issuer, Eligible Lender Trustee, the Administrator or the Master Servicer) that
have not notified the Indenture Trustee that such information is subject to a
confidentiality obligation with the Issuer, the Eligible Lender Trustee, the
Administrator or the Master Servicer (iii) disclosure of any and all information
(A) if required to do so by any applicable statute, law, rule or regulation, (B)
to any government agency or regulatory body having or claiming authority to
regulate or oversee any aspects of the Indenture Trustee's business or that of
its affiliates, (C) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Indenture Trustee or an affiliate or an officer,
director or employee thereof is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated herein approved in advance by the
Issuer or (E) to any affiliate, independent or internal auditor, agent, employee
or attorney of the Indenture Trustee having a need to know the same, provided
that the Indenture Trustee advises such recipient of the confidential nature of
the information being disclosed or (iv) any other disclosure authorized by the
Issuer.
SECTION 11.19. Usury. The amount of interest payable or paid on any
Note under the terms of this Indenture shall be limited to an amount which shall
not exceed the maximum non usurious rate of interest allowed by the applicable
laws of the United States or the lesser of New York or Pennsylvania (whichever
shall permit the higher rate), which could lawfully be contracted for, charged
or received (the "Highest Lawful Rate"). If any payment of interest on any Note
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid as a result of an error on the part of both the
Indenture Trustee, acting on behalf of the Noteholder of such Note, and the
Issuer, and the Noteholder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Issuer or the Indenture
Trustee, refund the amount of such excess and, at the option of the Indenture
Trustee, apply the excess to the payment of principal of such Note, if any,
remaining unpaid.
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<PAGE> 75
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
PNC Student Loan Trust I
By: THE FIRST NATIONAL BANK
OF CHICAGO
not in its individual
capacity but solely as
Eligible Lender Trustee,
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________
Name:
Title:
68
<PAGE> 76
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said _____________ of THE FIRST NATIONAL BANK OF CHICAGO, not in its individual
capacity but solely as Eligible Lender Trustee of PNC STUDENT LOAN TRUST I, a
Delaware trust, and that he executed the same as the act of said trust for the
purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________, 1997.
_____________________________
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
______________________
1
<PAGE> 77
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said BANKERS TRUST COMPANY, a New York banking corporation, and that she
executed the same as the act of said corporation for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
_____________, 1997.
___________________________
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
______________________
2
<PAGE> 78
APPENDIX A
TO THE INDENTURE
Definitions and Usage
---------------------
[See Appendix A to the Transfer and Servicing Agreement]
3
<PAGE> 79
EXHIBIT A-1
[FORM OF CLASS __ NON-REGISTERED NOTE]
PNC STUDENT LOAN TRUST I
ASSET BACKED NOTES
SERIES 1997-2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
THIS NOTE, AGREES THAT THIS NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND
(1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1)-(3) UNDER THE ACT OR A
QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL
ACCREDITED INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT.
THIS NOTE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1) EMPLOYEE BENEFIT
PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS OR KEOGH PLANS
SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL ACCOUNTS) WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH PLAN'S ARRANGEMENTS
OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR AN INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO OR FIRST CHICAGO
DELAWARE INC.
THIS NOTE IS NOT GUARANTEED OR INSURED BY FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY GOVERNMENTAL AGENCY.
No. $__________
<TABLE>
<CAPTION>
FINAL
MATURITY DATED INTEREST
Class DATE DATE RATE
- ----- -------- ----- --------
<S> <C> <C> <C>
</TABLE>
1
<PAGE> 80
REGISTERED NOTEHOLDER: _____________________
PRINCIPAL AMOUNT:
PNC STUDENT LOAN TRUST I, a Delaware business trust (the "Issuer"), for
value received, promises to pay, from the sources herein described, to the
Registered Noteholder identified above, or registered assigns, upon presentation
and surrender hereof at the Corporate Trust Office of BANKERS TRUST COMPANY, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above, as reduced from time to time as
described herein, on the Final Maturity Date identified above, and to pay to the
registered owner hereof, interest and principal hereon in lawful money of the
United States of America at the Class Interest Rate on the dates as provided
herein. Unless otherwise defined in this Series 199_-_ Note, capitalized terms
used in this Series 199_-_ Note shall have the respective meanings given to such
terms in the Master Indenture dated as of March __, 1997 (the "Master
Indenture"), as supplemented by the ______ Terms Supplement dated as of _______
__, 199_, (the "______ Terms Supplement" and, together with the Master
Indenture, the "Indenture") between the Issuer and [ ], as Indenture
Trustee.
This Series 199_-_ Note is one of a duly authorized issue of notes of
the Issuer designated as PNC Student Loan Trust 19971-1 Asset-Backed Notes,
Series 199_-_ (herein referred to by specific Class as the "Series 199_-_,
Notes" and collectively as the "Series 199_-_ Notes"), in the aggregate
principal amount of $_________ issued under the Indenture. The Series 199_-_
Notes are issued to finance the acquisition of Financed Student Loans, and to
make certain deposits to the Trust Accounts.
The Notes are secured under the Indenture which, together with certain
other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby
made to the Indenture for the provisions, among others, with respect to the
custody and application of the proceeds of the Notes, definitions of certain
capitalized terms used in this Series 199_-_ Note, the nature and the extent of
the liens and security of the Indenture, the collection and disposition of
revenues, the funds charged with and pledged to the payment of the principal of
and the interest on the Notes, the terms and conditions under which additional
Notes may be issued, the rights, duties and immunities of the Indenture Trustee,
the rights of the registered owners of the Notes, and
2
<PAGE> 81
the rights and obligations of the Issuer. By the acceptance of this Series
199_-_ Note, the registered owner hereof assents to all of the provisions of the
Indenture.
The unpaid principal amount hereof from time to time outstanding shall
bear interest at a Class Interest Rate, as described below, payable on each
applicable Distribution Date to the extent of interest accrued on the principal
then outstanding, such interest to accrue from the later of the date hereof or
the date through which interest has been paid or duly provided for. Interest at
a Class Interest Rate established pursuant to the _______ Terms Supplement shall
be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days.
This Series 199_-_ Note shall bear interest at a rate set forth in the
First Terms Supplement.
Distributions of principal will made in the manner described in the
Transfer and Servicing Agreement.
If an Event of Default as defined in the Indenture occurs, the
principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The Noteholder of this Series 199_-_ Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Series 199_-_ Note may be registered only upon
surrender hereof to the Indenture Trustee together with a certificate
substantially in the form of Exhibit B of the Master Indenture an assignment
duly executed by the registered owner or its attorney or legal representative in
such form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 199_-_ Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 199_-_ Note a new Series 199_-_ Note or Notes registered in the name of
the transferee, in any denomination or
3
<PAGE> 82
denominations authorized by the Indenture, of the same maturity and in an
aggregate principal amount equal to the unredeemed principal amount of this
Series 199_-_ Note and bearing the same interest as this Series 199_-_ Note.
In any case where the date fixed for the payment of principal of or
interest on this Series 199_-_ Note shall not be a Business Day, then payment of
such principal or interest need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts, conditions
and things required to have happened, to exist and to have been performed
precedent to and in the execution and delivery of the Indenture and issuance of
this Series 199_-_ Note have happened, do exist and have been performed in due
time, form and manner as required by law.
This Series 199_-_ Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
4
<PAGE> 83
IN WITNESS WHEREOF, the Issuer has caused this Series 199_-_
Note to be executed in its name by the manual or facsimile signature of an
Authorized Officer and the manual or facsimile signature of an Assistant
Secretary, and has caused its corporate seal or a facsimile thereof to be
hereto affixed.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but
solely as Eligible Lender Trustee
By:____________________________________
5
<PAGE> 84
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 199_-_ Notes designated in and issued
under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
Authorized Representative
Date of Authentication:
_______________________
6
<PAGE> 85
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto , the within Note and irrevocably appoints ,
attorney-in-fact, to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
[END OF FORM OF Series 199_-_ Note)
7
<PAGE> 86
EXHIBIT A-2
[FORM OF REGISTERED NOTE]
PNC STUDENT LOAN TRUST I
ASSET BACKED NOTES
SERIES 1997-2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR AN INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO OR FIRST CHICAGO
DELAWARE INC.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION ANY GOVERNMENTAL AGENCY.
No. $__________
<TABLE>
<CAPTION>
FINAL
MATURITY DATED INTEREST
Class DATE DATE RATE
- ----- -------- ----- --------
<S> <C> <C> <C>
</TABLE>
1
<PAGE> 87
REGISTERED NOTEHOLDER: CEDE & CO.
PRINCIPAL AMOUNT:. ___________________
PNC STUDENT LOAN TRUST ____, a Delaware business trust (the "Issuer"),
for value received, promises to pay, from the sources herein described, to the
Registered Noteholder identified above, or registered assigns, upon presentation
and surrender hereof at the Corporate Trust Office of BANKERS TRUST COMPANY, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above, as reduced from time to time as
described herein, on the Final Maturity Date identified above, and to pay to the
registered owner hereof, interest and principal hereon in lawful money of the
United States of America at the Class Interest Rate on the dates as provided
herein. Unless otherwise defined in this Series 199_-_ Note, capitalized terms
used in this Series 199_-_ Note shall have the respective meanings given to such
terms in the Master Indenture dated as of March 27, 1997 (the "Master
Indenture"), as supplemented by the First Terms Supplement dated as of March 27,
1997, (the Terms Supplement and, together with the Master Indenture, the
"Indenture") between the Issuer and [______], as Indenture Trustee.
This Series 199_-_ Note is one of a duly authorized issue of notes of
the Issuer designated as PNC Student Loan Trust 19971-1 Asset-Backed Notes,
Series 199_-_ (herein referred to by specific Class as the "Series 199_-_,
Notes" and collectively as the "Series 199_-_ Notes"), in the aggregate
principal amount of $_________ issued under the Indenture. The Series 199_-_
Notes are issued to finance the acquisition of Financed Student Loans, and to
make certain deposits to the Trust Accounts.
The Notes are secured under the Indenture which, together with certain
other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby
made to the Indenture for the provisions, among others, with respect to the
custody and application of the proceeds of the Notes, definitions of certain
capitalized terms used in this Series 199_-_ Note, the nature and the extent of
the liens and security of the Indenture, the collection and disposition of
revenues, the funds charged with and pledged to the payment of the principal of
and the interest on the Notes, the terms and conditions under which additional
Notes may be issued, the rights, duties and immunities of the Indenture Trustee,
the rights of the registered owners of the Notes, and the rights and obligations
of the Issuer. By the acceptance of
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<PAGE> 88
this Series 199_-_ Note, the registered owner hereof assents to all of the
provisions of the Indenture.
The unpaid principal amount hereof from time to time outstanding shall
bear interest at a Class Interest Rate, as described below, payable on each
applicable Distribution Date to the extent of interest accrued on the principal
then outstanding, such interest to accrue from the later of the date hereof or
the date through which interest has been paid or duly provided for. Interest at
a Class Interest Rate established pursuant to the First Terms Supplement shall
be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days.
This Series 199_-_ Note shall bear interest at a rate set forth in the
First Terms Supplement.
Distributions of principal will made on each Distribution Date to the
Series 199_ Notes in the manner described in the Transfer and Servicing
Agreement.
If an Event of Default as defined in the Indenture occurs, the
principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The Noteholder of this Series 199_-_ Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Series 199_-_ Note may be registered only upon
surrender hereof to the Indenture Trustee together with a certificate
substantially in the form of Exhibit B of the Master Indenture an assignment
duly executed by the registered owner or its attorney or legal representative in
such form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 199_-_ Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 199_-_ Note a new Series 199_-_ Note or Notes registered in the name of
the transferee, in any denomination or
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<PAGE> 89
denominations authorized by the Indenture, of the same maturity and in an
aggregate principal amount equal to the unredeemed principal amount of this
Series 199_-_ Note and bearing the same interest as this Series 199_-_ Note.
In any case where the date fixed for the payment of principal
of or interest on this Series 199_-_ Note shall not be a Business Day, then
payment of such principal or interest need not be made on such date but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution and delivery of the Indenture and
issuance of this Series 199_-_ Note have happened, do exist and have been
performed in due time, form and manner as required by law.
This Series 199_-_ Note shall not be valid or become
obligatory for any purpose or be entitled to any security or benefit under the
Indenture until the certificate of authentication hereon shall have been
manually signed by the Indenture Trustee.
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<PAGE> 90
IN WITNESS WHEREOF, the Issuer has caused this Series 199_-_ Note to be
executed in its name by the manual or facsimile signature of an Authorized
Officer and the manual or facsimile signature of an Assistant Secretary, and has
caused its corporate seal or a facsimile thereof to be hereto affixed.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but
solely as Eligible Lender Trustee
By: ___________________________________
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<PAGE> 91
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 199_-_ Notes designated in and issued
under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
Authorized Representative
Date of Authentication:
_______________________
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<PAGE> 92
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto , the within Note and irrevocably appoints ,
attorney-in-fact, to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
[END OF FORM OF Series 199_-_ Note)
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<PAGE> 93
EXHIBIT B
[Form of Purchaser's Representation and Warranty Letter]
PNC Bank, National Association
One PNC Plaza 249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
The First National Bank of Chicago, as
Certificate Registrar
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Re: PNC Student Loan Trust Asset Backed
Notes Series 1997-2
-------------------
Ladies and Gentlemen:
In connection with our proposed purchase of PNC Student Loan Trust I
Asset Backed Notes, Series 1997-2 (the "Notes") issued under the Trust
Agreement dated as of March 27, 1997 (the "Agreement"), between PNC Bank,
National Association, as Depositor (the "Depositor"), The First National Bank
of Chicago, as Eligible Lender Trustee and First Chicago Delaware Inc., as
Delaware trustee, the undersigned (the "Purchaser") represents, warrants and
agrees that:
1. It is an institutional "accredited investor" as defined in
Rule 501(a)(1)-(3) under the Securities Act or a qualified institutional buyer
as defined in Rule 144(a)(1) of the Securities Act and is acquiring the Notes
for its own institutional account or for the account of an institutional
accredited investor or qualified institutional buyer.
2. It is not (i) an employee benefit plan, retirement arrangement,
individual retirement account or Keogh plan subject to either Title I of the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended, or (2) an entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of any such plan's arrangements or account's investment in any such
entity.
3. It is a U.S. Person as defined in Section 7701(a)(30) of the Code.
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<PAGE> 94
4. It has such knowledge and experience in evaluating business and
financial matters so that it is capable of evaluating the merits and risks of an
investment in the Notes. It understands the full nature and risks of an
investment in the Notes and based upon its present and projected net income and
net worthy, it believes that it can bear the economic risk of an immediate or
future loss of its entire investment in the Notes.
5. It understands that the Notes will be offered in a transaction not
involving any public offering within the meaning of the Securities Act, and
that, if in the future it decides to resell, pledge or otherwise transfer any
Notes, such Notes may be resold, pledged or transferred only (a) to a person who
the seller reasonably believes is an institutional "accredited investor" as
defined in Rule 501(a)(1)-(3) under the Securities Act that purchases for its
own account or for the account of another institutional accredited investor or
(b) pursuant to an effective registration statement under the Securities Act.
6. It understands that each Trust Certificate will bear a legend
substantially to the following effect:
"THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1)-(3)
UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN
INSTITUTIONAL ACCREDITED INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1)
EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS
OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
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<PAGE> 95
THE NOTES DO NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR ANY INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO OR FIRST CHICAGO
DELAWARE INC.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY.
AS LONG AS THE SERIES 1997-2 NOTES ARE OUTSTANDING, THIS TRUST CERTIFICATE MAY
NOT BE SOLD, PLEDGED OR TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF SMITH
BARNEY MORTGAGE CAPITAL GROUP, INC., WHICH MAY NOT BE UNREASONABLY WITHHELD."
7. It is acquiring the Notes for its own account and not with a view to
the public offering thereof in violation of the Securities Act (subject,
nevertheless, to the understanding that disposition of its property shall at all
times be and remain within its control).
8. It has been furnished with all information regarding the Trust and
Notes which it has requested from the Trust and the Depositor.
9. Neither it nor anyone acting on its behalf has offered, transferred,
pledged, sold or otherwise disposed of any Trust Certificate, any interest in
any Trust Certificate or any other similar security to, or solicited any offer
to buy or accept a transfer, pledge or other disposition of any Trust
Certificate, any interest in any Trust Certificate or any other similar security
from, or otherwise approached or negotiated with respect to any Trust
Certificate, any interest in any Trust Certificate or any other similar security
with, any person in any manner or made any general solicitation by means of
general advertising or in any other manner, which would constitute a
distribution of the Notes under the Securities Act or which would require
registration pursuant to the Securities Act nor will the it act, nor has it
authorized or will authorize any person to act, in such manner with respect to
any Trust Certificate.
10. It is not an "affiliate" (within the meaning of Rule 144 under the
Securities Act) of the Depositor.
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<PAGE> 96
Dated:____________
Very truly yours,
_____________________________
NAME OF PURCHASER
By:
__________________________
Name:________________________
Title:_________________________
NOTE: To be executed by an
----- executive officer
11
<PAGE> 97
APPENDIX A
TO THE
INDENTURE
DEFINITIONS AND USAGE
Usage
-----
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and not to
any particular provision or subdivision thereof; references in an instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(d) The definitions contained in this Appendix are equally applicable
to both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below
or in any agreement or instrument that is
<PAGE> 98
governed by this Appendix means such agreement or instrument or statute as from
time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted
successors and assigns.
Definitions
-----------
"Act" has the meaning specified in Section 11.3(a) of the Indenture.
"Adjustment Payments" has the meaning set forth in Section 2.3(e) of
the Transfer and Servicing Agreement.
"Administration Agreement" means the Administration Agreement dated as
of March 27, 1997, among the Issuer, the Indenture Trustee and the
Administrator, as amended from time to time.
"Administration Fee" has the meaning specified in Section 3 of the
Administration Agreement.
"Administrator" means PNC Bank, National Association, in its capacity
as administrator of the Issuer and the Financed Student Loans, or any successor
as Administrator under the Transfer and Servicing Agreement.
"Administrator Default" has the meaning specified in Section 8.1(b) of
the Transfer and Servicing Agreement.
"Administrator's Certificate" means an Officer's Certificate of the
Administrator delivered pursuant to Section 4.7 of the Transfer and Servicing
Agreement, substantially in the form of Exhibit C thereto and as the
Administrator and the Indenture Trustee may agree.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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<PAGE> 99
"AFSA" means the AFSA Data Corporation.
"Authenticating Agent" means the Person appointed by the Indenture
Trustee at the request of the Issuer as Authenticating Agent for the Notes
pursuant to Section 2.3(8) of the Indenture, and any successor Authenticating
Agent for the Notes.
"Authorized Officer" means (i) with respect to the Issuer, any officer
of the Eligible Lender Trustee who is authorized to act for the Eligible Lender
Trustee in matters relating to the Issuer pursuant to the Basic Documents and
who is identified on the list of Authorized Officers delivered by the Eligible
Lender Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter), (ii) with respect to the
Administrator, any officer of the Administrator who is authorized to act for the
Administrator in matters relating to itself or to the Issuer and to be acted
upon by the Administrator pursuant to the Basic Documents and who is identified
on the list of Authorized Officers delivered by the Administrator to the
Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter), (iii) with respect to the
Transferor, any officer of the Transferor who is authorized to act for the
Transferor in matters relating to or to be acted upon by the Transferor pursuant
to the Basic Documents and who is identified on the list of Authorized Officers
delivered by the Transferor to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and (iv)
with respect to a Servicer, any officer of such Servicer who is authorized to
act for such Servicer in matters relating to or to be acted upon by such
Servicer pursuant to the Basic Documents and who is identified on the list of
Authorized Officers delivered by such Servicer to the Indenture Trustee, on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Funds" means, with respect to any Collection Period, the
excess of (A) the sum, without duplication, of the following amounts with
respect to such Collection Period: (i) all collections received by the Master
Servicer or any Servicer on the Financed Student Loans (including any Guarantee
Payments received with respect to the Financed Student Loans) during such
Collection Period; (ii) any payments, including without limitation Interest
Subsidy Payments and Special Allowance Payments, received by the Eligible Lender
Trustee during such Collection Period with respect to Financed Student Loans;
(iii) all proceeds from any sales of Financed Student Loans by the
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<PAGE> 100
Trust during such Collection Period; (iv) any payments of or with respect to
interest received by the Master Servicer or a Servicer during such Collection
Period with respect to a Financed Student Loan for which a Realized Loss was
previously allocated; (v) the aggregate Purchase Amounts received for those
Financed Students Loans purchased by the Transferor or purchased by the Master
Servicer under an obligation which arose during the related Collection Period;
(vi) the aggregate amounts, if any, received from the Transferor or the Master
Servicer, as the case may be, as reimbursement of non-guaranteed interest
amounts, lost Interest Subsidy Payments and Special Allowance Payments, with
respect to the Financed Student Loans pursuant to Section 3.2 or Section 4.5,
respectively, of the Transfer and Servicing Agreement (vii) all Adjustment
Payments, if any, received from the Transferor during such Collection Period and
(viii) Investments Earnings for such Collection Period over (B) the Issuer
Consolidation Payments for such Collection Period; provided, however, that
Available Funds will exclude all payments and proceeds of any Financed Student
Loans the Purchase Amount of which has been included in Available Funds for a
prior Collection Period, which payments and proceeds shall be paid to the
Transferor, and amounts used to reimburse the Master Servicer for Monthly
Advances pursuant to Section 5.4 of the Transfer and Servicing Agreement. For
any Distribution Date the term Available Funds also includes any Counterparty
Swap Payments received with respect to such Distribution Date.
"Basic Documents" means the Trust Agreement, the Master Indenture, the
Terms Supplement, the Transfer and Servicing Agreement, the Administration
Agreement, the Note Depository Agreement, the Guarantee Agreements, the
Underwriting Agreement and other documents and certificates delivered in
connection with any thereof and all amendments and supplements thereto.
"Benefit Plan" means any employee benefit plan, retirement arrangement,
individual retirement account or Keogh Plan subject to either Title I of ERISA
or Section 4975 of the Code, or any entity (including an insurance company
general account) whose underlying assets include plan assets by reason of a
plan's investment in the entity.
"Book-Entry Note" means a beneficial interest in the Notes, ownership
and transfers of which shall be through book entries by a Securities Depository
as described in Section 2.14 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which national banking associations or banking
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<PAGE> 101
institutions or trust companies in New York are authorized or obligated
authorized or obligated by law, regulation or executive order to remain closed.
"Certificate" means a certificate evidencing the beneficial interest of
a Certificateholder in the Trust, substantially in the form of Exhibit A to the
Trust Agreement.
"Certificate Balance" equals, initially, the Initial Certificate
Balance and, thereafter, equals the Initial Certificate Balance reduced by all
amounts previously distributed to Certificateholders as principal. In
determining whether the Certificateholders which hold Certificates representing
the requisite Certificate Balance have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, the Certificate Balance shall not include the principal balance of
Certificates owned by the Transferor or any Affiliate of the Transferor.
"Certificate Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Certificate Monthly Advance Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Certificate Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 3.10 of the Trust Agreement, which shall initially
be the Eligible Lender Trustee.
"Certificate Initial Rate" means 7.1875% per annum.
"Certificate Rate" means One-Month LIBOR plus 1.50%.
"Certificate Register" and "Certificate Registrar" means the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificateholder" means a Person in whose name a Certificate is
registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, with respect to any
Distribution Date, the Certificateholders Interest Distribution Amount for such
Distribution Date plus, for each Distribution Date on and after the Notes have
been paid in full, the Certificateholders' Principal Distribution Amount for
such Distribution Date.
"Certificateholders' Interest Carryover Shortfall"
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<PAGE> 102
means, with respect to any Quarterly Distribution Date, the excess, if any, of
(i) the sum of the related Certificateholders' Interest Distribution Amount on
the preceding Quarterly Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Quarterly
Distribution Date over (ii) the amount of interest actually distributed to such
Certificateholders on such preceding Quarterly Distribution Date, plus interest
on the amount of such excess interest due to such Certificateholders, to the
extent permitted by law, at the related Certificate Rate from such preceding
Quarterly Distribution Date to the current Quarterly Distribution Date.
"Certificateholders' Interest Distribution Amount" means, with respect
to Quarterly Distribution Date, the sum of (i) the amount of interest accrued at
One-Month LIBOR plus 1.50% per annum for each related Interest Period since the
last Quarterly Distribution Date on the outstanding Certificate Balance on the
immediately preceding Quarterly Distribution Date, after giving effect to all
distributions of principal to Certificateholders on such Quarterly Distribution
Date (or, in the case of the first Quarterly Distribution Date, on the Closing
Date) and (ii) the Certificateholders' Interest Carryover Shortfall for such
Quarterly Distribution Date.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of Quarterly Distribution Date on or after which the Notes have been paid
in full, the excess, if any, of (i) the sum of the Certificateholders' Principal
Distribution Amount on such Quarterly Distribution Date and any outstanding
Certificateholders' Principal Carryover Shortfall for the preceding Quarterly
Distribution Date over (ii) the amount of principal actually distributed to the
Certificateholders on such Quarterly Distribution Date.
"Certificateholders' Principal Distribution Amount" means, on each
Quarterly Distribution Date on and after the date when the principal balance of
each Class of Notes has been paid in full, the sum of (a) the Principal
Distribution Amount for the three Collection Periods preceding such Quarterly
Distribution Date and (b) the Certificateholders' Principal Carryover Shortfall
as of the close of the preceding Quarterly Distribution Date; provided, however,
that the Certificateholders' Principal Distribution Amount will in no event
exceed the outstanding principal balance of the Certificates. Further, on the
first Quarterly Distribution Date occurring on or after the Quarterly
Distribution Date on which the principal balance of the last Outstanding Class
of Notes is paid in full, the Certificateholders' Principal Distribution Amount
also will
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<PAGE> 103
include the excess, if any, of the amount of principal available to be
distributed on such Quarterly Distribution Date over the amount of principal
paid on the Notes on such date.
"Class" means any class of Notes.
"Class A Notes" means the Class A-1, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class A-7 Notes, Class A-8
Notes and the Class A-9 Notes.
"Class A-1 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-1 Asset Backed Notes."
"Class A-1 Noteholder" means any Noteholder of the Class A-1 Notes.
"Class A-2 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-2 Asset Backed Notes."
"Class A-2 Noteholder" means any Noteholder of the Class A-2 Notes.
"Class A-3 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-3 Asset Backed Notes."
"Class A-3 Noteholder" means any Noteholder of the Class A-3 Notes.
"Class A-4 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-4 Asset Backed Notes."
"Class A-4 Noteholder" means any Noteholder of the Class A-4 Notes.
"Class A-5 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-5 Asset Backed Notes."
"Class A-5 Noteholder" means any Noteholder of the Class A-5 Notes.
"Class A-6 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-6 Asset Backed Notes."
7
<PAGE> 104
"Class A-6 Noteholder" means any Noteholder of the Class A-6 Notes.
"Class A-7 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-7 Asset Backed Notes."
"Class A-7 Noteholder" means any Noteholder of the Class A-7 Notes.
"Class A-8 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-8 Asset Backed Notes."
"Class A-8 Noteholder" means any Noteholder of the Class A-8 Notes.
"Class A-9 Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-9 Asset Backed Notes."
"Class A-9 Noteholder" means any Noteholder of the Class A-9 Notes.
"Class B Notes" means Notes of the Issuer designated as "PNC Student
Loan Trust I, Series 1997-2, Subordinate LIBOR Rate Class B Asset Backed Notes."
"Class B Noteholder" means any Noteholder of the Class B Notes.
"Class Initial Rate" means, with respect to any Class of Notes, the
rate identified as such in the Terms Supplement.
"Class Interest Rate" means, with respect to any Class of Notes, the
interest rate determined as set forth in the Terms Supplement.
"Closing Date" means June 25, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Transfer and Servicing Agreement.
8
<PAGE> 105
"Collection Period" means, initially, with respect to each of the
Initial Financed Student Loans, the period beginning on the day immediately
succeeding the applicable Cut-off Date and ending on June 30, 1997, inclusive,
and thereafter, the Collection Period means the calendar month immediately
following the end of the previous Collection Period.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loan" means a Federal Loan designated as such, made by
the Transferor to an eligible borrower that represents the refinancing of
student loans to such borrower and his or her spouse in accordance with the
applicable terms and provisions of the Higher Education Act.
"Consolidation Loan Fees" means, as to any Collection Period, an amount
accrued during such Collection Period equal to 1.05% per annum of the average
outstanding principal balance of the Consolidation Loans owned by the Trust
during such Collection Period.
"Consolidation Prepayments" means, on any Exchange Date, the amount of
principal then on deposit in the Collection Account representing payments
received as a result of Financed Student Loans being repaid with the proceeds of
consolidation loans (provided, however, if an Exchange Date occurs during the
month of a Distribution Date, Consolidation Prepayments shall not include
amounts received during the month of such Distribution Date).
"Corporate Trust Office" means (i) with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
on the Closing Date is located at Four Albany Street, New York, New York 10006
Attention: Corporate Trust and Agency Group, Structured Finance Group
(telephone: (212) 250-6652; facsimile: (212) 250-6439) or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Certificateholder and the Transferor, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and the Transferor)
and (ii) with respect to the Eligible Lender Trustee, the principal corporate
trust office of the Eligible Lender Trustee located at One First National Plaza,
Suite 0126, Chicago, Illinois 60670, Attention: Steven Husbands telephone:
(312) 407-1892; facsimile (312) 407-1708;] or at such other address as the
Eligible Lender Trustee may designate by notice to the
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<PAGE> 106
Certificateholders and the Transferor, or the principal corporate trust office
of any successor Eligible Lender Trustee (the address of which the successor
Eligible Lender Trustee will notify the Certificateholders and the Transferor).
"Counterparty" means any Person who from time to time is a party to a
Swap Agreement with the Trust, which Persons are initially Deutsche Bank AG, New
York Branch and Morgan Guaranty Trust Company of New York.
"Counterparty Swap Payment" means, as to the Swap Agreements, with
respect to any Quarterly Distribution Date, the excess, if any, of (i) the
aggregate of the amounts accrued during the three Interest Periods immediately
preceding such Quarterly Distribution Date (or, in the case of the first
Quarterly Distribution Date, since the Closing Date) on the Notional Amount of
the Swap Agreements at the fixed rates set forth therein (calculated on the
basis of a year consisting of 12 months of 30 days each) over (ii) the aggregate
amounts payable under the Swap Agreements on such Quarterly Distribution Date by
the Trust to the Counterparties.
"Cut-off Date" means for the Financed Student Loans set forth on (i)
Schedule A-1 to the Transfer and Servicing Agreement, the close of business on
June 6, 1997 and (ii) Schedule A-2 to the Transfer and Servicing Agreement, the
close of business on June 17, 1997.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Deferral Phase" means the period during which the related borrower is
in school and for certain authorized periods as described in the Higher
Education Act.
"Definitive Notes" has the meaning specified in Section 2.14 of the
Indenture.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to,
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or registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313) of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles 8
and 9 of the
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UCC: book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Indenture Trustee or
its nominee or custodian and indicating that such custodian holds such
Trust Account Property solely as agent for the Indenture Trustee or its
nominee or custodian; and such additional or alternative procedures as
may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee
or its nominee or custodian, consistent with changes in applicable law
or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that
is an uncertificated security under Article 8 of the UCC and that is
not governed by clause (b) above, registration on the books and records
of the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such
uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or
custodian.
"Department" means the United States Department of Education,
an agency of the Federal government.
"Depositor" means PNC Bank, National Association in its
capacity as Depositor under the Trust Agreement.
"Determination Date" means, with respect to any Distribution
Date, the fifth Business Day preceding such Distribution Date.
"Distribution" means, with respect to any Financed Student
Loan, the amount of the monthly remittance payable to the holder of such
Financed Student Loan in accordance with its terms.
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"Distribution Date" means the 25th day of each January, April,
July and October (or in the case of the Class A-1 Notes, monthly on the 25th day
of each month and on July 20, 1998), or if any such day is not a Business Day,
the next succeeding Business Day, in each case commencing July 25, 1997.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the States (or any domestic branch
of a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade. An Eligible
Deposit Account may not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" means an entity which is an institution
whose deposits are insured by the FDIC and the unsecured and uncollateralized
long-term debt obligations of which shall be rated "AA-" or better by Standard &
Poor's, A2 or better by Moody's, and if rated by Fitch, "AA" or better by Fitch,
or the highest short-term rating by Standard & Poor's, the highest short term
rating by Moody's and if rated by Fitch, the highest short term rating by Fitch,
and which is either (i) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
or (iv) a principal subsidiary of a bank holding company.
"Eligible Investments" As used herein, Eligible Investments
shall include the following:
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation);
(2) Direct obligations of (including obligations issued or held in
book entry form on the books of) the Department of the
Treasury of the United States of America;
(3) obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United
States of America, including:
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- Export-Import Bank
- Farm Credit System Financial Assistance Corporation
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development
(PHA's)
- Federal Housing Administration;
(4) senior debt obligations rated "AAA" by Standard & Poor's,
"Aaa" by Moody's and if rated by Fitch, "AAA" by Fitch issued
by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation
(5) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which
have a rating on their short term certificates of deposit on
the date of purchase of "A-1+" by Standard & Poor's, "P-1" by
Moody's and if rated by Fitch, "F-1+" by Fitch and maturing
no more than 360 days after the date of purchase (ratings on
holding companies not being considered the rating of the
bank);
(6) commercial paper which is rated at the time of purchase in
the single highest classification, "A-1+" by Standard &
Poor's, "P-1" by Moody's and if rated by Fitch, "F-1+" by
Fitch and which matures not more than 270 days after the date
of purchase;
(7) Investments in money market funds (including, but not limited
to, money market mutual funds) rated "AAAm" or "AAAm-G" or
better by Standard & Poor's and if rated by Fitch, "AAA" by
Fitch;
(8) investment agreements acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment; and
(9) other forms of investments acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment.
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Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, for so long as the Transferor is a Certificateholder, all
investments of the Trust shall be made in investments permissible for a national
bank.
The value of the above investments shall be determined as follows:
a) as to investments the bid and asked prices of which are
published on a regular basis in The Wall Street Journal (or,
if not there, then in The New York Times): the average of the
bid and asked prices for such investments so published on or
most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not
published on a regular basis in The Wall Street Journal or
The New York Times: the average bid price at such time of
determination for such investments by any two nationally
recognized government securities dealers (selected by the
Indenture Trustee in its absolute discretion) at the time
making a market in such investments or the bid price
published by a nationally recognized pricing service;
c) as to certificates of deposit and bankers acceptances: the
face amount thereof, plus accrued interest; and
d) as to any investment not specified above: the value thereof
established by prior agreement between the Issuer, the
Administrator and the Indenture Trustee.
"Eligible Lender Trustee" means The First National Bank of
Chicago not in its individual capacity but solely as Eligible Lender Trustee
under the Trust Agreement, and its successors and assigns in such capacity.
"Eligible Lender Trustee Fee" has the meaning specified in
Section 8.1 of the Trust Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" has the meaning specified in Section 5.1 of
the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exchange Date" means, with respect to any Exchanged Student
Loans, the date specified as such in the related Transfer Agreement.
"Exchange Period" means the period commencing on the Closing
Date and ending on June 30, 2002.
"Exchanged Student Loan" means any Federal Loan transferred to
the Eligible Lender Trustee on behalf of the Issuer during the Exchange Period
pursuant to Section 2.2 of the Transfer and Servicing Agreement.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary, the Controller or the Treasurer of such corporation;
and with respect to any partnership, any general partner thereof.
"Expense Account" means the account designated as such
pursuant to Section 5.1 of the Transfer and Servicing Agreement.
"Expenses" means any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Eligible Lender Trustee or any of its officers, directors
or agents in any way relating to or arising out of the Trust Agreement, the
other Basic Documents, the Trust Estate, the administration of the Trust Estate
or the action or inaction of the Eligible Lender Trustee under the Trust
Agreement or the other Basic Documents.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means, for any date of determination, the
Federal funds (effective) rate as published on page 118 of the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices) on the immediately
preceding Business Day. If no such rate is published on such page on such day,
"Federal Funds Rate" shall mean for any date of determination, the Federal funds
(effective) rate as published by the Federal Reserve Board in the most recent
edition of Federal Reserve Statistical Release No. H.15 (519) that is available
on the Business Day immediately preceding such date.
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"Federal Loan" means a student loan which is a PLUS Loan, SLS
Loan, Consolidation Loan, Stafford Loan or Unsubsidized Stafford Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under Title
III of the Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
"Final Maturity Date" means, with respect to any Note, the
date on which the entire unpaid principal amount of such Note becomes due and
payable as provided in the Terms Supplement.
"Financed Student Loan" means the Federal Loans set forth in
Schedule A-1 and Schedule A-2 to the Transfer and Servicing Agreement and
Schedule A to each Transfer Agreement, as amended or supplemented from time to
time by the Master Servicer to accurately reflect the Financed Student Loans
then subject to the Lien of the Indenture. The Schedule of Financed Student
Loans may be in the form of microfiche or other form of electronic media.
"Financed Student Loan Files" means the documents specified in
Section 3.3 of the Transfer and Servicing Agreement.
"Fitch" means Fitch Investors Service, LP.
"Fixed Rate Notes" means the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class A-7 Notes.
"FNMA" means Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing under
the Federal National Mortgage Association Charter Act, or any successor thereto.
"Grace Period" means certain grace periods authorized by the
Higher Education Act during which the related borrower's scheduled payments are
deferred.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect
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of the Trust Estate and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guarantee Agreements" means each agreement entered into
between the Eligible Lender Trustee and a Guarantor pursuant to which such
Guarantor guarantees payments on Financed Student Loans.
"Guarantee Payment" means any payment made by a Guaranty
Agency pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"Guarantor" means the Department, the California Student Aid
Commission, an agency of the State of California, the Florida Department of
Education, an agency of the State of Florida, the Georgia Higher Education
Assistance Corporation, a public non-profit corporation, Great Lakes Higher
Education Corporation, a public non-profit corporation, the Illinois Student
Assistance Commission, an agency of the State of Illinois, the Kentucky Higher
Education Assistance Authority, an agency of the Commonwealth of Kentucky, the
Michigan Higher Education Assistance Authority, an autonomous agency of the
Michigan Department of the Treasury, the New Jersey Higher Education Assistance
Authority, an agency of the State of New Jersey, the New Mexico Student Loan
Guarantee Corporation, a New Mexico non-profit corporation, PHEAA and United
States Aid Funds, Inc. a Delaware non-profit corporation and their respective
successors and assigns.
"Guaranty Agency" means any agency which has an agreement with
the Department of Education to be a guarantor of Federal Loans.
"Higher Education Act" means the Higher Education Act of 1965,
as amended, together with any rules, regulations and interpretations thereunder.
"Indenture" means the Master Indenture and the Terms
Supplement, each as amended or supplemented from time to time.
"Indenture Trust Estate" means all money, instruments, rights
and other property that are, from time to time, subject or intended to be
subject to the Lien and security interest of the Indenture for the benefit of
the Noteholders (including all
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property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"Indenture Trustee" means Bankers Trust Company, not in its
individual capacity but solely as Indenture Trustee under the Indenture and its
successors and assigns in such capacity.
"Indenture Trustee Fee" has the meaning specified in Section
6.7 of the Master Indenture, as may be amended pursuant to any amendment to the
Terms Supplement.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Transferor and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Transferor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Transferor or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Master Indenture, made by an Independent appraiser or other expert appointed by
an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" and that the signer is Independent within
the meaning thereof.
"Individual Note" means a Note of an initial principal amount
equal to $50,000. A Note of an original principal amount in excess thereof
shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such initial principal amount by $50,000, without regard to
fractions.
"Initial Financed Student Loans" has the meaning specified in
Section 2.1 of the Transfer and Servicing Agreement.
"Initial Certificate Balance" means $1,000, representing the
Certificate Balance as of the Closing Date
"Initial Pool Balance" means $1,014,231,891, representing the
sum of Pool Balance for the Initial Financed Student Loans set forth on Schedule
A-1 as of the applicable Cut-
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off Date and the Pool Balance for the Initial Financed Student Loans set forth
in Schedule A-2 as of the applicable Cut-off Date.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its property
in an involuntary case under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or State bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Institution of Higher Education" means an institution of
higher education as defined under the Higher Education Act (20 U.S.C.A.
1085(b)).
"Interest Period" has the meaning set forth in the Terms
Supplement.
"Interest Subsidy Payments" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Trust Accounts to be deposited into the Collection Account on
or prior to such Distribution Date pursuant to Section 5.1(b) of the Transfer
and Servicing Agreement.
"Issuer" means PNC Student Loan Trust I.
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"Issuer Consolidation Payments" has the meaning set forth in
Section 2.3(f) of the Transfer and Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LIBOR Determination Date" means, with respect to any Class of
Notes or the Certificates for which One-Month LIBOR is being determined other
than for the Initial Period, the applicable Rate Determination Date, which must
be a Business Day and London Banking Day.
"LIBOR Rate" means, with respect to the LIBOR Rate Notes or
the Certificates, the related Class Interest Rate or Certificate Rate, as the
case may be, that results from a determination based on One-Month LIBOR and is
determined as described in the Terms Supplement, the Transfer and Servicing
Agreement or the Trust Agreement, as the case may be.
"LIBOR Rate Notes" means the Class A-1 Notes, the Class A-8
Notes, the Class A-9 Notes and the Class B Notes.
"LIBOR Rate Determination Date" has the meaning set forth in
the Terms Supplement.
"Lien" means a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens and any other liens, if any,
which attach to the respective Financed Student Loan by operation of law as a
result of any act or omission by the related Obligor or obligations under
Subservicing Agreements in effect as of the Closing Date.
"London Banking Day" means any Business Day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
"Majority Certificateholder" means the holders of more than
50% of the Certificate Balance of the Certificates without regard to the
Certificates held by the Depositor.
"Master Indenture" means the Indenture dated as of March 27,
1997 and amended on the Closing Date between the Issuer and the Indenture
Trustee, as further amended or supplemented from time to time.
"Master Servicer" means PNC Bank, National Association, and
its permitted successors and assigns, as Master Servicer of
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the Financed Student Loans under the Transfer and Servicing Agreement.
"Master Servicer Default" means an event specified in
Section 8.1(a) of the related Transfer and Servicing Agreement or Supplemental
Transfer and Servicing Agreement.
"Minimum Purchase Price" has the meaning set forth in Section
9.1(b) of the Transfer and Servicing Agreement.
"Monthly Advance" means the amount, if any, advanced by the
Master Servicer pursuant to Section 5.10 of the Transfer and Servicing Agreement
with respect to Guarantee Payments or Interest Subsidy Payments applied for but
not received as of the end of the Collection Period immediately preceding the
date such Monthly Advance is made.
"Monthly Advance Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Loan Rate" shall have the meaning set forth in the Terms
Supplement.
"Notes" means the notes issued by the Issuer pursuant to the
Master Indenture and the Terms Supplement.
"Note Depository Agreement" means the agreement dated as of
the Closing Date relating to the Notes among the Issuer, the Indenture Trustee,
the Administrator and the Depository Trust Company, as the initial Securities
Depository.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Note Owner" means, with respect to a Book Entry Note, the
Person who is the owner of such Book Entry Note, as reflected on the books of
the Securities Depository, or on the books of a Person maintaining an account
with such Securities Depository (directly as Securities Depository Participant
or as an indirect participant, in each case in accordance with the rules of such
Securities Depository).
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.6 of the Indenture.
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"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Distribution Amount" means, as to any Class of
Notes, with respect to any Distribution Date, the sum of the related
Noteholders' Interest Distribution Amount and the Noteholders' Principal
Distribution Amount for such Distribution Date.
"Noteholders' Interest Carryover" has the meaning set forth in
the Terms Supplement.
"Noteholders' Interest Carryover Shortfall" means, as to any
Class of Notes, with respect to any Distribution Date, the excess of (i) the sum
of the related Noteholders' Interest Distribution Amount on the preceding
Distribution Date and any Noteholders' Interest Carryover Shortfall on such
preceding Distribution Date over (ii) the amount of interest actually allocated
to such Noteholders on such preceding Distribution Date, plus interest on the
amount of such excess interest due to such Noteholders, to the extent permitted
by law, at the related Class Interest Rate from such preceding Note Distribution
Date to the current Distribution Date.
"Noteholders' Interest Distribution Amount" means, as to any
Class of Notes, with respect to any Distribution Date, the sum of (i) the amount
of interest accrued at the respective Class Interest Rate for each Interest
Period since the last Distribution Date for such Class of Notes (or in the case
of the first Distribution Date, the Closing Date) on the outstanding principal
balance of such Class of Notes on the immediately preceding Distribution Date
relating to such Notes after giving effect to all principal distributions to
holders of Notes of such Class on such date (or, in the case of the first
Distribution Date, the Closing Date) and (ii) the Noteholders' Interest
Carryover Shortfall for such Class for such Distribution Date; provided,
however, that the Noteholders' Interest Distribution Amount will not include any
Noteholders' Interest Carryover.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of (i) the sum of the Noteholders'
Principal Distribution Amount on such Distribution Date and any outstanding
Noteholders' Principal Carryover Shortfall for the preceding Distribution Date
over (ii) the amount of principal actually allocated to the Noteholders on such
Distribution Date.
"Noteholders' Principal Distribution Amount" means, as to any
Distribution Date, the sum of (i) the Principal
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Distribution Amount for the three Collection Periods (or with respect to the
Class A-1 Notes, the one Collection Period) immediately preceding the month of
such Distribution Date (ii) any Parity Percentage Payments to be made on such
Distribution Date, (iii) the Noteholders' Principal Carryover Shortfall as of
the close of the preceding Distribution Date and (iv) the amount, if any,
remaining in deposit in the Note Distribution Account following the preceding
Distribution Date; provided, however, that the Noteholders' Principal
Distribution Amount allocable to a Class of Notes will not exceed the
Outstanding Amount of such Class of Notes. In addition, with respect to each
Class of Notes, on the related Final Maturity Date the Noteholders' Principal
Distribution Amount will include the amount required to reduce the Outstanding
Amount of such Notes to zero.
"Notional Amount" means as to any Swap Agreement, with respect
to any Quarterly Distribution Date, the percentage of the original Outstanding
Amount of the related Class of Fixed Rate Notes set forth on the Scheduled
Principal Balance Table for such Class for the Quarterly Distribution Date
immediately preceding such Quarterly Distribution Date (or in the case of the
first Quarterly Distribution Date, the original Outstanding Amount of such
Class).
"Obligor" on a Financed Student Loan means the borrower or
co-borrowers of such Financed Student Loan and any other Person who owes
payments in respect of such Financed Student Loan, including (i) the Guaranty
Agency thereof and (ii) with respect to any Interest Subsidy Payment or Special
Allowance Payment, if any, thereon, the Department.
"Officer's Certificate" means (i) in the case of the Issuer, a
certificate signed by an Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Transferor, the Master Servicer or the
Administrator, a certificate signed by an Authorized Officer of the Transferor,
the Master Servicer or the Administrator, as appropriate and (iii) in the case
of the Servicer, a certificate signed by an Authorized Officer of the Servicer.
"One-Month LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of one month commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of
24
<PAGE> 121
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Master Servicer will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Master Servicer, at
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
for loans in U.S. dollars to leading European banks having the Index Maturity
and in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR in effect for the applicable Interest Period will
be One-Month LIBOR in effect for the previous Interest Period.
"Opinion of Counsel" means (i) with respect to the Issuer,
one or more written opinions of counsel who may, except as otherwise expressly
provided in the Master Indenture, be employees of or counsel to the Issuer or
Administrator or any of their Affiliates and who shall be reasonably
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.1 of the Master Indenture, and shall be
in form and substance reasonably satisfactory to the Indenture Trustee and (ii)
with respect to the Transferor, the Administrator or the Master Servicer, one
or more written opinions of counsel who may be an employee of or counsel to the
Transferor, the Administrator or the Master Servicer, which counsel shall be
reasonably acceptable to the Indenture Trustee and the Eligible Lender Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders thereof
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to the Indenture); and
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<PAGE> 122
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Transferor or any Affiliate of any of the foregoing Persons shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be do disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Transferor or any Affiliate of any
of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or Class of Notes or Certificates as applicable, Outstanding at the
date of determination.
"Parity Percentage" means, as of any date of determination,
the fraction expressed as a percentage, the numerator of which is the sum of (i)
the then Pool Balance and (ii) all amounts on deposit in the Collection Account
and the Reserve Account and the denominator of which is the sum of the aggregate
Outstanding Amount of the Notes and the Certificates, accrued and unpaid
interest thereon plus accrued and unpaid Transaction Fees and Consolidation Loan
Fees.
"Parity Percentage Payment" means, with respect to any
Distribution Date, the amount, if any, to be transferred from the Collection
Account to the Note Distribution Account pursuant to Section 5.5(e) of the
Transfer and Servicing Agreement, up to the amount necessary for the Parity
Percentage to equal 102.5% after giving effect to all distributions to be made
on such Distribution Date.
"Participant" means a Securities Depository Participant.
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<PAGE> 123
"Paying Agent" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Master Indenture and is authorized by the Issuer to make the
payments to and distributions from the Collection Account and payments of
principal of and interest and any other amounts owing on the Notes on behalf of
the Issuer.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance
Agency.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pledged Account or Fund" means the Collection Account, the
Reserve Account, the Note Distribution Account and the Certificate Distribution
Account.
"PLUS Loan" means a Federal Loan made pursuant to the
provisions of the PLUS program established under Section 428B of the Higher
Education Act (or predecessor provisions).
"Pool Balance" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized), after giving effect to the following,
without duplication: (i) all payments in respect of principal received by the
Trust during such Collection Period from or on behalf of borrowers and
Guarantors and, with respect to certain payments on certain Financed Student
Loans, the Department, (ii) the principal portion of all Purchase Amounts
received by the Trust for such Collection Period and (iii) any Exchanged Student
Loans acquired conveyed to the Trust and any Financed Student Loans conveyed by
the Trust during such Collection Period, in each case pursuant to Sections 2.2
and 2.3(e).
"PP Loans" means all Stafford Loans and Unsubsidized Stafford
Loans with a first disbursement made by the Transferor on or after July 1, 1996.
"PP Program" means the PNC Bank Preferred Payment Program.
27
<PAGE> 124
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.7 of the Master Indenture and
in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Primary Servicer" means, with respect to any Financed Student
Loan, the entity responsible for the primary servicing of such Financed Student
Loan on a day to day basis, it being understood that where a subservicer
appointed in accordance with the terms of the Transfer and Servicing Agreement
has responsibility for servicing a Financed Student Loan, such subservicer and
not the Master Servicer shall be the Primary Servicer with respect such Financed
Student Loan.
"Principal Distribution Amount" means, with respect to any
Collection Period, the excess of (A) the sum, without duplication, of the
following amounts: (i) that portion of all collections received by the Master
Servicer or any Servicer on the Financed Student Loans that is allocable to
principal (including the portion of any Guarantee Payments received that is
allocable to principal of the Financed Student Loans); (ii) the portion of the
proceeds allocable to principal from the sale of Financed Student Loans by the
Trust during such Collection Period; (iii) all Realized Losses incurred during
such Collection Period; (iv) to the extent attributable to principal, the
Purchase Amount received with respect to each Financed Student Loan repurchased
by the Transferor or purchased by the Master Servicer under an obligation which
arose during the related Collection Period; and (v) the Adjustment Payments, if
any, received from the Transferor during such Collection Period over (B) the
Issuer Consolidation Payments for such Collection Period; provided, however,
that the Principal Distribution Amount will exclude all payments and proceeds of
any Financed Student Loans the Purchase Amount of which has been included in
Available Funds for a prior Collection Period.
"Principal Factor" means, as of any Distribution Date for each
Class of Notes, a seven-digit decimal figure equal to the Outstanding Amount of
such Class of Notes (after giving effect to any payments of principal made on
such Distribution Date) divided by the original Outstanding Amount of such
Class. The Principal Factor will be 1.0000000 for each Class of Notes as of the
Closing Date; thereafter, the Principal Factor for each Class of Notes will
decline to reflect reductions in the outstanding principal balance of such
Class.
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<PAGE> 125
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Amount" means, as to any Financed Student Loan on
any date of determination, the amount required to prepay in full the outstanding
principal balance of such Financed Student Loan as of the last day of the most
recently completed Collection Period, including all accrued but unpaid interest
thereon (including interest to be capitalized) through the last day of the
Collection Period in which such Financed Student Loan is being purchased.
"Purchased Student Loan" means a Financed Student Loan
purchased pursuant to Section 4.5 of the Transfer and Servicing Agreement or
repurchased pursuant to Section 3.2 of the Transfer and Servicing Agreement.
"Qualified Letter of Credit" means a letter of credit
delivered or to be delivered to the Indenture Trustee in lieu of a deposit of
cash or Eligible Investments in the Reserve Account for such Class or Series,
which letter of credit shall
(a) be irrevocable and name the Indenture Trustee, in
its capacity as such, as the sole beneficiary thereof;
(b) be issued by a bank whose credit standing is
acceptable to each of the rating agencies which are rating or
have rated the Notes of such Series;
(c) provide that if at any time the then current credit
standing of the issuing bank is such that the continued
reliance on such letter of credit for the purpose or purposes
for which it was originally delivered to the Indenture
Trustee would result in a downgrading of any rating of the
Notes of such Class or Series, the Indenture Trustee may
either draw under such letter of credit any amount up to and
including the entire amount then remaining available for
drawing thereunder or terminate such letter of credit;
(d) be transferable to any successor trustee hereunder
with respect to such Class or Series; and
(e) meet such other standards as may be specified in the
Terms Supplement.
"Qualified Institutional Buyer" has the meaning ascribed to
such term in Rule 144A under the Securities Act.
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<PAGE> 126
"Quarterly Distribution Date" means, the 25th day of each
January, April, July, and October or if such day is not a Business Day, the next
succeeding Business Day, commencing July 25, 1997.
"Rate Determination Date" means for the LIBOR Rate Notes and
the Certificates, the date which is both two Business Days and two London
Business Days preceding the related Rate Adjustment Date.
"Rating Agency" means Moody's, Standard & Poor's and Fitch. If
no such organization or successor is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Transferor, notice of which designation
shall be given to the Indenture Trustee, the Eligible Lender Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Transferor, the Master
Servicer, the Eligible Lender Trustee and the Indenture Trustee in writing that
such action will not result in and of itself in a reduction or withdrawal of the
then current ratings of each Class of Notes.
"Realized Loss" means, for each Financed Student Loan
submitted to a Guarantor for a Guarantee Payment, the excess, if any, of (i) the
unpaid principal balance of such Financed Student Loan on the date it was first
submitted to a Guarantor for a Guarantee Payment over (ii) all amounts received
on or with respect to principal on such Financed Student Loan (including amounts
received pursuant to Sections 3.2 and 4.5 of the Transfer and Servicing
Agreement) up through the earlier to occur of (A) the date a related Guarantee
Payment is made or (B) the last day of the Collection Period occurring 12 months
after the date the claim for such Guarantee Payment is first denied.
"Record Date" means, with respect to a Distribution Date, the
close of business on the second Business Day preceding such Distribution Date.
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator or the Transferor and (iii) having an established place of
business in London.
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<PAGE> 127
"Related Financed Student Loan File" has the meaning specified
in Section 3.8(a) of the Transfer and Servicing Agreement.
"Repayment Phase" means the period during which the related
borrower is required to make payments of principal and interest on the related
Financed Student Loan.
"Requisite Amount" means, with respect to any Series for which
a Reserve Account is required to be maintained, an amount specified in or
determined pursuant to the Terms Supplement.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the related Transfer and
Servicing Agreement.
"Reserve Account Initial Deposit" means, $10,300,000.
"Responsible Officer" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
with direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee, including any Managing
Director, Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary, or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Schedule of Financed Student Loans" means the master listing
of the Financed Student Loans set forth in Schedule A-1 and Schedule A-2 to the
Transfer and Servicing Agreement and Schedule A to each Transfer Agreement, in
each case as from time to time amended or supplemented to reflect the Financed
Student Loans then subject to the Lien of the Indenture. The Schedule of
Financed Student Loans may be in the form of microfiche or in the form of
electronic media.
"Scheduled Principal Balance Table" means the Scheduled
Principal Balance Table set forth on Schedule C to the Transfer and Servicing
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE> 128
"Securities Depository" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Securities Depository Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository.
"Senior Notes" means the Class A Notes.
"Senior Noteholder" means the holder of a Senior Note.
"Serial Loan" means a Financed Student Loan that is serial to
a student loan owned by a third party.
"Series" means a separate Series of Notes issued pursuant to
the Master Indenture, which Series may, as provided in the Terms Supplement, be
divided into two or more Classes.
"Series 1997-2 Notes" means the Notes designated as the
Issuer's Asset-Backed Notes, Series 1997-2, issued pursuant to the terms of the
Master Indenture and the Terms Supplement and having an original principal
amount equal to $1,030,000,000.
"Servicer" means AFSA, USA Group, PHEAA or, subject to
satisfying the Rating Agency Condition, another entity appointed by the Master
Servicer to service the Financed Student Loans, in its capacity as servicer of
the Financed Student Loans.
"Servicer's Report" means any report of the Master Servicer
delivered pursuant to Section 4.8(a) of the Transfer and Servicing Agreement,
substantially in the form acceptable to the Administrator.
"Servicing Fee" means a quarterly fee in an amount equal to
1.00% of the average Pool Balance as of the last day of each of the three
Collection Periods immediately preceding such Quarterly Distribution Date.
"SLS Loan" means a Federal Loan designated as such that is
made under the Supplemental Loans for Students Program pursuant to the Higher
Education Act.
"Special Allowance Payments" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect of
the Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust
in accordance with the Higher Education Act.
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<PAGE> 129
"Specified Reserve Account Balance" means, with respect to any
Distribution Date, an amount equal to the greater of (i) 1.00% of the sum of the
Outstanding Amount of the Notes and the Certificate Balance on such Distribution
Date, after giving effect to all payments to be made on such date; or (ii)
$1,000,000; provided, however, that such balance shall not exceed the sum of the
aggregate Outstanding Amount of the Notes and the Certificate Balance.
"Stafford Loan" means a student loan designated as such that
is made under Section 428 of the Higher Education Act (excluding Unsubsidized
Stafford Loans).
"Standard & Poor's" means Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc., and its successors and assigns.
"State" means any one of the 50 States of the United States of
America or the District of Columbia.
"Subcustodian" has the meaning specified in Section 3.8 of the
Transfer and Servicing Agreement.
"Subordinated Notes" means the Class B Notes.
"Subordinated Noteholder" means any Noteholder of a
Subordinated Note.
"Subsequent Cut-off Date" means the day as to which principal
and interest accruing with respect to an Exchanged Student Loan are transferred
to the Eligible Lender Trustee on behalf of the Issuer pursuant to Section 2.2
of the Transfer and Servicing Agreement.
"Subservicing Agreement" has the meaning specified in Section
4.13 of the Transfer and Servicing Agreement.
"Successor Administrator" has the meaning specified in
Section 3.7(e) of the Indenture.
"Successor Master Servicer" has the meaning specified in
Section 3.7(e) of the Indenture.
"Swap Agreements" mean the ISDA Master Agreement dated as of
June 20, 1997, between Deutsche Bank AG, New York Branch, and the Issuer; and
the ISDA Master Agreement dated as of June 20, 1997, between Morgan Guaranty
Trust Company of New York and the Issuer, in each case including the schedules
attached thereto and the confirmations issued in connection therewith, and any
33
<PAGE> 130
similar agreement subsequently entered into by the Trust, as each may be
amended, supplemented or otherwise modified from time to time.
"Swap Termination Payments" means termination payments, if
any, owed by the Trust under the Swap Agreements.
"Telerate Page 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Terms Supplement" means, the Second Terms Supplement to the
Indenture dated as of June 25, 1997 between the Issuer and The Indenture
Trustee.
"Transaction Fees" means, collectively, the Servicing Fee, the
Administration Fee, Indenture Trustee Fee and the Eligible Lender Trustee Fee.
"Transfer Agreement" has the meaning set forth in Section
2.2(b) of the Transfer and Servicing Agreement.
"Transfer and Servicing Agreement" means the Transfer and
Servicing Agreement dated as of June 25, 1997, among the Issuer, the Transferor,
the Administrator, the Eligible Lender Trustee and the Master Servicer, as
amended from time to time.
"Transferor" means PNC Bank, National Association.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any
document or instrument to specific provisions of proposed or temporary
regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Trust" means the Issuer, established pursuant to the Trust
Agreement.
"Trust Account Property" means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, if any,
and all proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section 5.1 of
the Transfer and Servicing Agreement.
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<PAGE> 131
"Trust Agreement" means the Trust Agreement dated as of March
27, 1997 and amended on the Closing Date, between the Depositor and the Eligible
Lender Trustee, as further amended and supplemented from time to time.
"Trust Certificate" means a Certificate.
"Trust Certificateholder" means a person in whose name a Trust
Certificate is registered in the Certificate Register.
"Trust Estate" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to (i) the
property and rights assigned to the Trust pursuant to Article II of the Transfer
and Servicing Agreement and each Transfer Agreement, (ii) the Swap Agreements,
(iii) all funds on deposit from time to time in the Trust Accounts and (iv) all
other property of the Trust from time to time, including any rights of the
Eligible Lender Trustee and the Trust pursuant to the Transfer and Servicing
Agreement, the Administration Agreement and the other Basic Documents.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trust Swap Payment" means, as to the Swap Agreements with
respect to any Quarterly Distribution Date, the excess, of (i) the aggregate
amount accrued on the Notional Amounts of the Swap Agreements during the three
Interest Periods immediately preceding such Quarterly Distribution Date (or in
the case of the first Distribution Date, since the Closing Date) pursuant to the
Swap Agreements over (ii) the aggregate amount payable under the Swap Agreements
on such Quarterly Distribution Date by each Counterparty to the Trust.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"Unsubsidized Stafford Loan" means a Federal Loan designated
as such that is made under Section 428H of the Higher Education Act.
"USA Group" means USA Group Loan Services, Inc.
35
<PAGE> 1
Exhibit 4.2
- --------------------------------------------------------------------------------
SECOND TERMS SUPPLEMENT
TO THE
INDENTURE
DATED AS OF MARCH 27, 1997
between
PNC STUDENT LOAN TRUST I
and
BANKERS TRUST COMPANY
Indenture Trustee
----------------------------
Dated as of June 25, 1997
-----------------------------
Securing
$1,030,000,000
PNC STUDENT LOAN TRUST I STUDENT LOAN ASSET BACKED NOTES
SERIES 1997-2
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.........................................................................................................2
DEFINITIONS.......................................................................................................2
ARTICLE II........................................................................................................6
AUTHORIZATION, TERMS AND ISSUANCE.................................................................................6
SECTION 2.1. Authorization of Series 1997-2 Notes.......................................................6
SECTION 2.2. Purposes...................................................................................6
SECTION 2.3. Terms of Series 1997-2 Notes...............................................................7
SECTION 2.4 Series 1997-2 Notes........................................................................8
SECTION 2.5. Class Interest Rates......................................................................10
SECTION 2.6. Additional Provisions Regarding the Class Interest Rates on the LIBOR Notes...............11
ARTICLE III......................................................................................................12
DISTRIBUTIONS....................................................................................................12
Section 3.1 Distributions of Interest and Principal.....................................................12
ARTICLE IV.......................................................................................................12
MISCELLANEOUS....................................................................................................12
SECTION 4.1. Adoption of This Second Terms Supplement..................................................12
SECTION 4.2. Counterparts..............................................................................12
SECTION 4.3. Indenture Constitutes a Security Agreement................................................12
SECTION 4.4. Governing Law.............................................................................12
SECTION 4.5. Ratification of Indenture.................................................................13
EXHIBIT A-1 Form of LIBOR Rate Note
EXHIBIT A-2 Form of Fixed Rate Note
EXHIBIT A-3 Form of Class B Note
</TABLE>
-i-
<PAGE> 3
SECOND TERMS SUPPLEMENT, dated as of June 25, 1997, between
PNC STUDENT LOAN TRUST I, a Delaware business trust (the "Issuer") acting
through THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, not
in its individual capacity but solely as eligible lender trustee (the "Eligible
Lender Trustee"), and BANKERS TRUST COMPANY, a New York banking corporation duly
established, existing and authorized to accept and execute trusts of the
character herein set out under and by virtue of the laws of the State of New
York, with its principal corporate trust office in New York, New York (the
"Indenture Trustee"), as Indenture Trustee under an Indenture dated as of March
27, 1997, as amended on June 25, 1997 and as may be further amended and
supplemented from time to time (the "Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Indenture provides, among other things,
that the Issuer, as provided in the Trust Agreement, and the Indenture Trustee
may enter into an indenture supplemental to the Indenture for the purpose of
authorizing a Series of Notes and to specify certain terms of such Series of
Notes. The Issuer has duly authorized the creation of a Series of Notes in an
aggregate principal amount not to exceed $1,030,000,000 to be known as the
Issuer's Student Loan Asset Backed Notes, Series 1997-2 (the "Series 1997-2
Notes"), and the Issuer and the Indenture Trustee are executing and delivering
this Second Terms Supplement in order to provide for the Series 1997-2 Notes.
Except as otherwise specified herein, or as the context may require, capitalized
terms used but not defined herein shall have the meanings set forth in Appendix
A to the Transfer and Servicing Agreement dated as of June 25, 1997 (the
"Transfer and Servicing Agreement") among the Issuer, PNC Bank, National
Association as Transferor, Administrator and Master Servicer (in such
capacities, the "Transferor", the "Administrator" and the "Master Servicer,"
respectively) and the Eligible Lender Trustee which Appendix A also contains
rules as to usage that shall be applicable herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Series 1997-2 Notes and such Swap Counterparty,
all of the Issuer's right, title and interest in and to (a) the Financed Student
Loans listed in the Schedule of Financed Student Loans(as such Schedule may be
amended or supplemented from time to time including, but not limited to for
purposes of adding any Exchanged Student Loans acquired by the Trust during the
Exchange Period) and all obligations of the Obligors thereunder including all
moneys paid thereunder (other than Interest Subsidy Payments and Special
Allowance Payments payable through the applicable Cut-off Date (or with respect
to the Exchanged Student Loans, the applicable
<PAGE> 4
Subsequent Cut-off Date)), and all written communications received by the
Transferor with respect thereto and still retained by the Transferor in
accordance with its retention policies (including borrower correspondence,
notices of death, disability or bankruptcy and requests for deferrals or
forbearance), after the close of business on the applicable Cut-off Date (or
with respect to the Exchanged Student Loans, AFTER the applicable Subsequent
Cut-off Date), (b) all funds on deposit from time to time in the Trust Accounts
(other than the Certificate Distribution Account and the Certificate Monthly
Advance Account) and in all investments and proceeds thereof (including all
income thereon), (c) the Swap Agreements, including without limitation, payments
from the Counterparties thereunder, (d) all proceeds of the foregoing, including
without limitation any proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or other liquid property. Such Grants are made,
however, in trust, to secure the Series 1997-2 Notes and the Issuer's
obligations under the Swap Agreements, equally and ratably without prejudice,
priority or distinction, between any Note and any other Note by reason of
difference in time of issuance or otherwise; provided, however, that the Class B
Notes are subordinated to all amounts owing on the Class A Notes and the Swap
Termination Payments under the Swap Agreements are subordinate to all amounts
owing on the Class A Notes and on Class B Notes as described herein, in the
Indenture or any other Basic Document, and to secure (i) the payment of all
amounts due on the Series 1997-2 Notes, as such amounts become due in accordance
with their terms, (ii) the payment of all other sums payable under the
Indenture, this Second Terms Supplement, the Swap Agreements or any other Basic
Document with respect to the Series 1997-2 Notes and (iii) compliance with the
provisions of the Indenture, this Second Terms Supplement or any other Basic
Document with respect to the Series 1997-2 Notes, all as provided in the
Indenture and this Second Terms Supplement.
The Indenture Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and of the Indenture and
agrees to perform the duties herein or therein required.
ARTICLE I.
DEFINITIONS
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in Appendix A to the Transfer and Servicing Agreement.
Additionally, the following terms shall be as defined below.
-2-
<PAGE> 5
"Authorized Denominations" means, with respect to each Class
of Series 1997-2 Notes, $50,000 and integral multiples of $1,000 in excess
thereof.
"Book-Entry Form" or "Book-Entry System" means a form or
system under which (i) the beneficial right to principal and interest may be
transferred only through a book-entry, (ii) physical securities in registered
form are issued only to a Securities Depository or its nominee as registered
owner, with the securities "immobilized" to the custody of the Securities
Depository, and (iii) the book-entry is the record that identifies the owners of
beneficial interests in that principal and interest.
"Class A Notes" means the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class
A-6 Notes, the Class A-7 Notes, the Class A-8 Notes and the Class A-9 Notes.
"Class A-1 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-2 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-3 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-4 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-5 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-6 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-7 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-8 Notes" has the meaning set forth in Section 2.1
herein.
"Class A-9 Notes" has the meaning set forth in Section 2.1
herein.
"Class B Notes" has the meaning set forth in Section 2.1
herein.
"Class Initial Rate" means for the LIBOR Rate Notes (i)
5.6275% per annum with respect to the Class A-1 Notes, (ii)
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<PAGE> 6
5.7975% per annum with respect to the Class A-8 Notes, (iii) 5.8675% per annum
with respect to the Class A-9 Notes and (iv) 5.9875% per annum with respect to
the Class B Notes.
"Class Interest Rate" means with respect to (i) the LIBOR Rate
Notes, each variable rate of interest per annum borne by a Class of LIBOR Rate
Notes during each Interest Period and determined in accordance with the
provisions of Sections 2.4 and 2.5 hereof, (ii) the Class A-2 Notes 6.138% per
annum, (iii) the Class A-3 Notes 6.314% per annum, (iv) the Class A-4 Notes
6.446% per annum, (v) the Class A-5 Notes, 6.530% per annum, (vi) the Class A-6
Notes, 6.572% per annum and (vii) the Class A-7 Notes, 6.728% per annum.
"Effective Interest Rate" means, for any Financed Student Loan
and any Collection Period, the per annum rate at which such Financed Student
Loan accrues interest during such Collection Period after giving effect to all
applicable Interest Subsidy Payments and Special Allowance Payments accrued with
respect to such Financed Student Loan.
"Final Maturity Date" means (i) July 20, 1998 with respect to
the Class A-1 Notes, (ii) January 25, 2000 with respect to the Class A-2 Notes,
(iii) January 25, 2001 with respect to the Class A-3 Notes, (iv) January 25,
2002 with respect to the Class A-4 Notes, (v) January 25, 2003 with respect to
the Class A-5 Notes, (vi) January 25, 2004 with respect to the Class A-6 Notes,
(vii)January 25, 2007 with respect to the Class A-7 Notes, (viii) January 25,
2008 with respect to the Class A-8 Notes, (ix) January 25, 2017 with respect to
the Class A-9 Notes, and (x) January 25, 2027 with respect to the Class B Notes.
"Fixed Rate Notes" means the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class A-7 Notes.
"Initial Interest Period" means, as to each Class of Series
1997-2 Notes, the period commencing on the Closing Date and continuing through
(and including) the day immediately preceding the Distribution Date occurring in
July 1997.
"Interest Period" means, with respect to each Class of Series
1997-2 Notes, the period commencing on the 25th day of each month (or the
Closing Date with respect to the Initial Interest Period) and ending on (and
including) the 24th day of the following month (provided that for any Interest
Period ending immediately prior to a Distribution Date, such Interest Period
shall end on the day immediately preceding such Distribution Date and the next
Interest Period will begin on such Distribution Date).
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<PAGE> 7
"Interest Rate" means, with respect to each Class of the
Series 1997-2 Notes, the rate of interest per annum borne by such Class as of
the time referred to, including, without limitation, the related Class Initial
Rate and the related Class Interest Rate.
"LIBOR Rate Adjustment Date" means, for each Interest Period,
the date on which a Class Interest Rate for a Class of LIBOR Rate Notes first
effective, which is the first day of such Interest Period.
"LIBOR Rate Determination Date" means the date which is both
two Business Days and two London Banking Days immediately preceding the related
LIBOR Rate Adjustment Date.
"LIBOR Rate Notes" means the Class A-1 Notes, the Class A-8
Notes, the Class A-9 Notes and the Class B Notes.
"Net Loan Rate" means for any Interest Period, the weighted
average Effective Interest Rate for the Collection Period immediately preceding
the last day of such Interest Period, less the Program Operating Expense
Percentage (or less 1.181% per annum during the period from the Closing Date
through December 31, 1998).
"Noteholders' Interest Carryover" means, with respect to any
Interest Period for any Class of LIBOR Rate Notes for which the Class Interest
Rate for such Interest Period is based on the Net Loan Rate, the amount equal to
the excess, if any, of (a) the amount of interest such Class of LIBOR Rate Notes
would have accrued in respect of the related Interest Period had interest been
calculated based on the applicable Class Interest Rate (without giving effect to
the Net Loan Rate) over (b) the amount of interest such Class of Notes actually
accrued in respect of such Interest Period based on the Net Loan Rate, together
with the unpaid portion of any such excess from prior Interest Periods (and
interest accrued thereon, to the extent permitted by law, calculated based on
One-Month LIBOR; provided, however, that, with respect to any Class of LIBOR
Rate Notes, on the related Final Maturity Date, the portion of the Noteholders'
Interest Carryover allocable to such Class of LIBOR Rate Notes will be equal to
the lesser of (i) the Noteholders' Interest Carryover on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to such Class of LIBOR Rate Notes on such date pursuant to
Section 5.5 of the Transfer and Servicing Agreement.
"Second Terms Supplement" means this Second Terms Supplement,
as from time to time amended or supplemented.
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<PAGE> 8
"Series 1997-2 Notes" has the meaning set forth in the
Preliminary Statement.
ARTICLE II.
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. Authorization of Series 1997-2 Notes. There is
hereby authorized the borrowing of funds, and to evidence such borrowing there
are hereby authorized ten (10) Classes of Series 1997-2 Notes (collectively, the
"Series 1997-2 Notes"), designated as (i)the "PNC Student Loan Trust I, Series
1997-2, Senior LIBOR Rate Class A-1 Asset Backed Notes" (the "Class A-1 Notes")
in the aggregate principal amount of $90,000,000, (ii) the "PNC Student Loan
Trust I, Series 1997-2, Senior Fixed Rate Class A-2 Asset Backed Notes" (the
"Class A-2 Notes") in the aggregate principal amount of $107,000,000, (iii) the
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-3 Asset
Backed Notes" (the "Class A-3 Notes") in the aggregate principal amount of
$107,000,000, (iv) the "PNC Student Loan Trust I, Series 1997-2, Senior Fixed
Rate Class A-4 Asset Backed Notes" (the "Class A-4 Notes") in the aggregate
principal amount of $102,000,000, (v) the "PNC Student Loan Trust I, Series
1997-2, Senior Fixed Rate Class A-5 Asset Backed Notes" the "Class A-5 Notes")
in the aggregate principal amount of $94,000,000, (vi) the "PNC Student Loan
Trust I, Series 1997-2, Senior Fixed Rate Class A-6 Asset Backed Notes" (the
"Class A-6 Notes") in the aggregate principal amount of $72,500,000, (vii) the
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-7 Asset
Backed Notes" (the "Class A-7 Notes") in the aggregate principal amount of
$121,000,000,(viii) the "PNC Student Loan Trust I, Series 1997-2, Senior LIBOR
Rate Class A-8 Asset Backed Notes" (the "Class A-8 Notes") in the aggregate
principal amount of $175,000,000, (ix) the "PNC Student Loan Trust I, Series
1997-2, Senior LIBOR Rate Class A-9 Asset Backed Notes" (the "Class A-9 Notes")
in the aggregate principal amount of $125,450,000 and (x) the "PNC Student Loan
Trust I, Series 1997-2, Subordinate LIBOR Rate Class B Asset Backed Notes" (the
"Class B Notes") in the aggregate principal amount of $36,050,000.
SECTION 2.2. Purposes. The Series 1997-2 Notes are
authorized to finance the acquisition by the Issuer of Financed Student Loans,
and to make deposits to the Trust Accounts required hereby.
SECTION 2.3. Terms of Series 1997-2 Notes. The Series 1997-2
Notes shall be issued in fully registered form, in substantially the forms set
forth in Exhibit A-1 hereof (with respect to the Class A Notes, that are LIBOR
Rate Notes), Exhibit
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<PAGE> 9
A-2 (with respect to the Class A Notes that are Fixed Rate Notes) and Exhibit
A-3 (with respect to the Class B Notes), in each case with such variations,
omissions and insertions as may be required by the circumstances, as may be
required or permitted by the Indenture and this Second Terms Supplement, or be
consistent with the Indenture and this Second Terms Supplement and necessary or
appropriate to conform to the rules and requirements of any governmental
authority or any usage or requirement of law with respect thereto.
The Series 1997-2 Notes may be issued only in Authorized
Denominations. The Series 1997-2 Notes shall be dated as of the Closing Date.
Each Class of Series 1997-2 Notes shall mature on its Final Maturity Date. Each
Class of Series 1997-2 Notes shall be numbered consecutively from 1 upwards
with the prefix A-1-(with respect to the Class A-1 Notes), A-2-(with respect to
the Class A-2 Notes, A-3- (with respect to the Class A-3 Notes), A-4- (with
respect to the Class A-4 Notes), A-5- (with respect to the Class A-5 Notes),
A-6- (with respect to the Class A-6 Notes), A-7- (with respect to the Class A-7
Notes), A-8- (with respect to the Class A-8 Notes), A-9- (with respect to the
Class A-9 Notes) and B-(with respect to the Class B Notes) preceding each
number. The Series 1997-2 Notes shall be issued to a Securities Depository for
use in a Book-Entry System in accordance with the provisions of Section 2.14 of
the Indenture.
Interest on each Series 1997-2 Note shall accrue on the
Outstanding Amount of such Series 1997-2 Note until such Series 1997-2 Note has
been paid in full or payment has been duly provided for, as the case may be,
and shall accrue from the later of the Closing Date or the most recent
Distribution Date to which interest has been paid or duly provided for. Each
Series 1997-2 Note shall bear interest at an interest rate determined in
accordance with the provisions and subject to the limitations set forth herein,
and interest on Series 1997-2 Notes shall be paid for the related Interest
Period on each Quarterly Distribution Date (or on each Distribution Date in the
case of the Class A-1 Notes) and on each date of payment of principal thereof
to the extent of interest accrued on the principal then being paid.
Principal will be paid to the Series 1997-2 Notes on each
Quarterly Distribution Date (or on each Distribution Date in the case of the
Class A-1 Notes) in an amount up to the Noteholder's Principal Distribution
Amount on such Quarterly Distribution Date or Distribution Date, as the case
may be, in the order and priorities set forth in the Transfer and Servicing
Agreement and the Indenture.
Except as otherwise set forth in the Indenture and the
Transfer and Servicing Agreement, the rights of the Holders of the Class B
Notes to receive distributions with respect to interest shall be subordinated
to the prior rights of the Holders
-7-
<PAGE> 10
of the Class A Notes to receive all payments of interest to which they are
entitled and each Swap Counterparty to receive the portion of the Trust Swap
Payment to which it is entitled and, after each Class of Series 1997-2 Notes has
received the full amount of interest to which it is entitled and each Swap
Counterparty has received the full amount of the portion of the Trust Swap
Payments to which it is entitled, the rights of the Holders of the Class B Notes
to receive distributions with respect to principal shall be subordinated to the
prior rights of the Holders of the Class A Notes to receive all payments of
principal to which they are entitled.
SECTION 2.4 Series 1997-2 Notes. (a) Until the initial LIBOR
Rate Adjustment Date, each Class of LIBOR Rate Notes shall bear interest at the
Class Initial Rate for such Class. Thereafter, (i) the Class A-1 Notes shall
bear interest during each Interest Period at a Class Interest Rate equal to the
lesser of (x) One-Month LIBOR minus 0.06% and (y) the Net Loan Rate; (ii) the
Class A-8 Notes shall bear interest during each Interest Period at a Class
Interest Rate equal to the lesser of (x) One-Month LIBOR plus 0.11% and (y) the
Net Loan Rate; (iii) the Class A-9 Notes shall bear interest during each
Interest Period at a Class Interest Rate equal to the lesser of (x) One-Month
LIBOR plus 0.18% and (y) the Net Loan Rate; and (iv) the Class B Notes shall
bear interest during each Interest Period at a Class Interest Rate equal to the
lesser of (x) One-Month LIBOR plus 0.30% and (y) the Net Loan Rate. Each Class
of Fixed Rate Notes shall bear interest during each Interest Period, including
the Initial Interest Period, at the Class Interest Rate applicable to such Class
of Fixed Rate Notes. Notwithstanding the foregoing in no event shall the Class
A-8 Notes, the Class A-9 Notes or the Class B Notes bear interest during any
Interest Period at a rate greater than 18.0% per annum.
(b) With respect to the LIBOR Rate Notes, during each
Interest Period, interest at the related Class Interest Rate shall accrue daily
and shall be computed for the actual number of days elapsed in such Interest
Period on the basis of a year consisting of 360 days. With respect to the Fixed
Rate Notes, during each Interest Period, interest at the related Class Interest
Rate shall accrue daily and shall be computed on the basis of a year consisting
of 12 months of 30 days each.
(c) Notwithstanding anything to the contrary contained in the
Indenture, a Noteholders' Principal Carryover Shortfall (other than
Noteholders' Principal Carryover Shortfall, which result in the Outstanding
Amount of any Class of Notes not being reduced to zero on the Final Maturity
Date of such Class) will not result in an Event of Default. In addition, the
failure to pay the aggregate amount of Noteholders' Interest Carryover as a
result of insufficient Available Funds will not result in the occurrence of an
Event of Default.
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<PAGE> 11
(d) If for any Interest Period the Class Interest Rate for a
Class of LIBOR Rate Notes (without giving effect to the Net Loan Rate) is
greater than the Net Loan Rate, then the Class Interest Rate applicable to such
Class of LIBOR Rate Notes for that Interest Period will be the Net Loan Rate.
If the Class Interest Rate applicable to such Class of LIBOR Rate Notes for any
Interest Period is the Net Loan Rate, the Master Servicer shall determine the
Noteholders' Interest Carryover, if any, with respect to such Class of LIBOR
Rate Notes for such Interest Period. Such Noteholders' Interest Carryover shall
bear interest calculated at a rate based on One-Month LIBOR (as determined by
the Master Servicer from the Distribution Date for the Interest Period with
respect to which such Noteholders' Interest Carryover was calculated, until
paid. For purposes of this Second Terms Supplement, any reference to
"principal" or "interest" herein shall not include within the meaning of such
words Noteholders' Interest Carryover or any interest accrued on any such
Noteholders' Interest Carryover. Such Noteholders' Interest Carryover shall be
separately calculated for each LIBOR Rate Note of such Class by the Master
Servicer during such Interest Period in sufficient time for the Indenture
Trustee to give notice to each Noteholder of such Noteholders' Interest
Carryover as required in the next succeeding sentence. On the Distribution Date
for an Interest Period with respect to which such Noteholders' Interest
Carryover for a Class of LIBOR Rate Notes has been calculated by the Master
Servicer, the Indenture Trustee shall give written notice to each Noteholder of
the applicable Class of the Noteholders' Interest Carryover applicable to each
Noteholder's LIBOR Rate Note of such Class, which written notice may be
included in any other written statement sent by the Indenture Trustee to such
Noteholders, and shall be mailed on such Distribution Date by first-class mail,
postage prepaid, to each such Noteholder at such Noteholder's address as it
appears on the registration books maintained by the Note Registrar.
The Noteholders' Interest Carryover for a Class of LIBOR Rate
Notes shall be paid by the Indenture Trustee on Outstanding LIBOR Rate Notes of
such Class on the first occurring Distribution Date for such Class if and to
the extent funds are available therefor, in accordance with all priorities set
forth in the Transfer and Servicing Agreement. To the extent that any portion
of the Noteholders' Interest Carryover for a Class of LIBOR Rate Notes remains
unpaid after payment of a portion thereof, and subject to the next sentence
below, such unpaid portion of the Noteholders' Interest Carryover shall be paid
in whole or in part as required hereunder until fully paid by the Indenture
Trustee on the next occurring Distribution Date or Dates, as necessary, to the
extent funds are available therefor in accordance with all priorities set forth
in the Transfer and Security Agreement. Any Noteholders' Interest Carryover
(and any interest accrued thereon) on any LIBOR Rate Note which is due and
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<PAGE> 12
payable on the related Final Maturity Date shall be paid to the Noteholder
thereof on said Final Maturity Date to the extent that moneys are available
therefor in accordance with the provisions of this Second Terms Supplement and
the Transfer and Servicing Agreement; provided, however, that any Noteholders'
Interest Carryover (and any interest accrued thereon) which is not yet due and
payable on said Final Maturity Date shall be canceled with respect to said
LIBOR Rate Notes on said Final Maturity Date. On any Distribution Date on which
the Indenture Trustee pays only a portion of the Noteholders' Interest
Carryover on a LIBOR Rate Note of such Class, the Indenture Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph
to the Noteholders of such LIBOR Rate Note receiving such partial payment of
the Noteholders' Interest Carryover remaining unpaid on such LIBOR Rate Note.
(e) In the event that the Master Servicer no longer
determines, or fails to determine, when required, the Class Interest Rate with
respect to a Class of LIBOR Rate Notes, or, if for any reason such manner of
determination shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the Class Interest Rate for the next succeeding
Interest Period for such Class of LIBOR Rate Notes shall be determined by the
Indenture Trustee provided it is notified in writing by the Master Servicer on
or prior to the LIBOR Rate Determination Date, or, if the Indenture Trustee
fails to make such determinations, such Class Interest Rate shall be the Net
Loan Rate for such next succeeding Interest Period.
SECTION 2.5. Class Interest Rates. On each LIBOR Rate
Determination Date, the Master Servicer shall determine the Class Interest Rate
for each Class of LIBOR Rate Notes that will be applicable to the Interest
Period immediately following such LIBOR Rate Determination Date (without giving
effect to the Net Loan Rate). In connection therewith, the Master Servicer shall
calculate One-Month LIBOR and shall notify the Indenture Trustee and the
Eligible Lender Trustee in writing of One-Month LIBOR. The determination by the
Master Servicer of One-Month LIBOR shall (in the absence of manifest error) be
final and binding upon all parties. On each LIBOR Rate Determination Date, the
Master Servicer also shall determine the Net Loan Rate for the related Interest
Period. Based upon such calculations, the Master Servicer shall determine the
Class Interest Rate applicable to each Class of LIBOR Rate Notes for the
applicable Interest Period.
SECTION 2.6. Additional Provisions Regarding the Class
Interest Rates on the Series 1997-2 Notes. The determination of a Class Interest
Rate by the Master Servicer or the Indenture Trustee or any other Person
pursuant to the provisions of the applicable Section of this Article II shall be
conclusive and binding on the Noteholders of the Class of Series 1997-2 Notes to
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<PAGE> 13
which such Class Interest Rate applies, and the Issuer and the Indenture Trustee
may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or
payable on a Class of Series 1997-2 Notes (including interest calculated as
provided herein, plus any other amounts that constitute interest on the Series
1997-2 Notes of such Class under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to the Series 1997-2 Notes of
such Class or related documents) calculated from the date of issuance of the
Series 1997-2 Notes of such Class through any subsequent day during the term of
the Series 1997-2 Notes of such Class or otherwise prior to payment in full of
the Series 1997-2 Notes of such Class exceed the amount permitted by applicable
law. If the applicable law is ever judicially interpreted so as to render
usurious any amount called for under the Series 1997-2 Notes of such Class or
related documents or otherwise contracted for, charged, reserved, taken or
received in connection with the Series 1997-2 Notes of such Class, or if the
acceleration of the maturity of the Series 1997-2 Notes of such Class results
in payment to or receipt by the Noteholder or any former Noteholder of the
Series 1997-2 Notes of such Class of any interest in excess of that permitted
by applicable law, then, notwithstanding any provision of the Series 1997-2
Notes of such Class or related documents to the contrary, all excess amounts
theretofore paid or received with respect to the Series 1997-2 Notes of such
Class shall be credited on the principal balance of the Series 1997-2 Notes of
such Class (or, if the Series 1997-2 Notes of such Class have been paid or
would thereby be paid in full, refunded by the recipient thereof), and the
provisions of the Series 1997-2 Notes of such Class and related documents shall
automatically and immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under the
Series 1997-2 Notes of such Class and under the related documents.
ARTICLE III
DISTRIBUTIONS
Section 3.1 Distributions of Interest and Principal. The
Indenture Trustee shall make distributions from and to the several Trust
Accounts in the manner provided for in Section 5.5 of the Transfer and Servicing
Agreement, as such Section may be amended from time to time. All principal
payments of Notes of any Class shall be made pro rata to the Holders of Notes of
such Class. No later than each Determination Date, the Master Servicer shall
compute the Principal Factor of each Class of Series 1997-2 Notes for the
upcoming Distribution Date and shall
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<PAGE> 14
notify the Indenture Trustee in writing of such Principal Factors.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Adoption of This Second Terms Supplement. This
Second Terms Supplement is adopted pursuant to the provisions of the Indenture.
SECTION 4.2. Counterparts. This Second Terms Supplement may
be simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. Indenture Constitutes a Security Agreement.
This Second Terms Supplement constitutes a security agreement for the purposes
of the Uniform Commercial Code.
SECTION 4.4. Governing Law. This Second Terms Supplement
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 4.5. Ratification of Indenture. As supplemented by
this Second Terms Supplement, the Indenture is in all respects ratified and
confirmed, and the Indenture so supplemented by this Second Terms Supplement
shall be read, taken and construed as one and the same instrument. Each addition
to and amendment of the Indenture contained herein is solely for purposes of the
Series 1997-2 Notes, and shall have no effect on any other Series of Notes
issued pursuant to the Indenture. If any term of this Second Terms Supplement
conflicts with any term of the Indenture or any previously executed Terms
Supplement, this Second Terms Supplement shall control for purposes of the
Series 1997-2 Notes.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this
Second Terms Supplement to be duly executed as of the day and year first above
written.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as Eligible
Lender Trustee
By: /s/ Steve M. Husbands
-----------------------
Name: Steve M. Husbands
Title: Assistant Vice President
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By: /s/ Linda A. Rakolta
-----------------------
Name: Linda A. Rakolta
Title: Vice President
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<PAGE> 16
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Steve M. Husbands,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said Assistant Vice President of THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible Lender Trustee of PNC STUDENT LOAN
TRUST I, a Delaware trust, and that he executed the same as the act of said
trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 25th day of June,
1997.
/s/ Richard J. Derr
------------------------
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
- ----------------------
-14-
<PAGE> 17
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Linda A. Rakolta, known to
me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
BANKERS TRUST COMPANY, a New York banking corporation, and that she executed
the same as the act of said corporation for the purpose and consideration
therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 25th day of June,
1997.
/s/ Richard J. Derr
------------------------
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
- ----------------------
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<PAGE> 18
EXHIBIT A-1
[FORM OF SENIOR LIBOR RATE NOTE]
PNC STUDENT LOAN TRUST I, SERIES 1997-2
SENIOR LIBOR RATE CLASS [A-1][A-8] [A-9] ASSET BACKED NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO, FIRST CHICAGO
DELAWARE, INC. OR BANKERS TRUST COMPANY.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
No. A-[1][8][9]-_____ $__________
<TABLE>
<CAPTION>
FINAL CLASS
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
----- ---- ---- ---- -----
<S> <C> <C> <C> <C>
[A-1][A-8] One-Month
[A-9] LIBOR [-] [+]
____% as
herein
provided
</TABLE>
REGISTERED NOTEHOLDER: CEDE & CO.
PRINCIPAL AMOUNT: -------------------
1
<PAGE> 19
PNC BANK STUDENT LOAN TRUST I, a Delaware business trust (the
"Issuer"), for value received, promises to pay, from the sources herein
described, to the Registered Noteholder identified above, or registered assigns,
upon presentation and surrender hereof at the Corporate Trust Office of Bankers
Trust Company, as Paying Agent, or at the principal office of any successor or
additional Paying Agent, the Principal Amount identified above on the Final
Maturity Date identified above, and to pay to the registered owner hereof,
interest and principal hereon in lawful money of the United States of America at
the Class Interest Rate on the dates as provided herein. Unless otherwise
defined herein, capitalized terms used herein shall have the respective meanings
given to such terms in the Indenture dated as of March 27, 1997, as amended on
the Closing Date (the "Indenture") and as supplemented by the Second Terms
Supplement dated as of June 25, 1997, (the "Second Terms Supplement" and,
together with the Indenture, the "Indenture") between the Issuer and Bankers
Trust Company, as Indenture Trustee as further amended and supplemented from
time to time.
This is one of a duly authorized issue of notes of the Issuer
designated as "PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class
[A-1][A-8][A-9] Asset Backed Notes", in the aggregate principal amount of
$_________ (herein referred to as the "Class [A-1][A-8][A-9] Notes" together
with the PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class
[A-1][A-8][A-9] Asset Backed Notes (the "Class [A-1][A-8][A-9] Notes"), the PNC
Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class [A-1][A-8][A-9]
Asset backed Notes (the "Class [A-1] [A-8] [A-9] Notes") and the PNC Student
Loan Trust I, Subordinate LIBOR Rate Class B Asset Backed Notes (the "Class B
Notes), the "LIBOR Rate Notes" and together with the Fixed Rate Notes, the
"Notes")issued under the Indenture. The Notes are issued to finance the
acquisition of Financed Student Loans by the Trust, and to make certain deposits
into the Pledged Accounts.
The Notes are secured under the Indenture which, together with
certain other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders and each Swap Counterparty all the rights and remedies of the Issuer
under certain Financed Student Loans and rights under various contracts
providing for the issuance, guarantee and servicing of such Financed Student
Loans. Reference is hereby made to the Indenture for the provisions, among
others, with respect to the custody and application of the proceeds of the
Notes, the nature and the extent of the liens and security of the Indenture, the
collection and disposition of revenues, the funds charged with and pledged to
the payment of the principal of and the interest on the Notes, the rights,
duties and immunities of the Indenture Trustee, the rights of the registered
owners of the Notes, and the rights and obligations of the Issuer. By the
acceptance of
2
<PAGE> 20
this LIBOR Rate Note, the registered owner hereof assents to all of the
provisions of the Indenture.
Distributions of principal and interest will made on each
[Quarterly] Distribution Date to the holders of this LIBOR Rate Note in the
manner described in the Transfer and Servicing Agreement.
The rate of interest on the LIBOR Rate Notes shall be
determined in accordance with the Second Terms Supplement.
If an Event of Default as defined in the Indenture occurs, the
principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The holder of this LIBOR Rate Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this LIBOR Rate Note may be registered only
upon surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this LIBOR Rate Note and subject to the payment of
any fees and charges as provided by the Indenture, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange for this LIBOR
Rate Note a new LIBOR Rate Note or Notes registered in the name of the
transferee, in any denomination or denominations authorized by the Indenture, of
the same maturity and in an aggregate principal amount equal to the unredeemed
principal amount of this LIBOR Rate Note and bearing the same interest as this
LIBOR Rate Note.
In any case where the date fixed for the payment of principal
of or interest on this LIBOR Rate Note shall not be a Business Day, then payment
of such principal or interest need not be made on such date but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date fixed for the payment thereof.
3
<PAGE> 21
This LIBOR Rate Note shall not be valid or become obligatory
for any purpose or be entitled to any security or benefit under the Indenture
until the certificate of authentication hereon shall have been manually signed
by the Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this LIBOR Rate
Note to be executed in its name by the manual or facsimile signature of an
Authorized Officer and the manual or facsimile signature of an Assistant
Secretary, and has caused its corporate seal or a facsimile thereof to be
hereto affixed.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By: _______________________________________
4
<PAGE> 22
CERTIFICATE OF AUTHENTICATION
This Note is one of the LIBOR Rate Notes designated in and
issued under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By: _________________________
Authorized Representative
Date of Authentication:
- -----------------------
5
<PAGE> 23
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto _________________________________, the within Note and
irrevocably appoints ___________________________________, attorney-in-fact, to
transfer the within Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
6
<PAGE> 24
EXHIBIT A-2
[FORM OF SENIOR FIXED RATE NOTE]
PNC STUDENT LOAN TRUST I, SERIES 1997-2
SENIOR FIXED RATE CLASS [A-2] [A-3] [A-4] [A-5] [A-6] [A-7] ASSET BACKED NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO, FIRST CHICAGO
DELAWARE, INC. OR BANKERS TRUST COMPANY.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
No. A-[2][3][4][5][6][7]-_____ $__________
<TABLE>
<CAPTION>
FINAL CLASS
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
----- ---- ---- ---- -----
<S> <C>
[A-2][A-3][A-4] ____%
[A-5][A-6][A-7]
</TABLE>
REGISTERED NOTEHOLDER: CEDE & CO.
PRINCIPAL AMOUNT: ---------------------
1
<PAGE> 25
PNC BANK STUDENT LOAN TRUST I, a Delaware business trust (the
"Issuer"), for value received, promises to pay, from the sources herein
described, to the Registered Noteholder identified above, or registered
assigns, upon presentation and surrender hereof at the Corporate Trust Office
of Bankers Trust Company, as Paying Agent, or at the principal office of any
successor or additional Paying Agent, the Principal Amount identified above on
the Final Maturity Date identified above, and to pay to the registered owner
hereof, interest and principal hereon in lawful money of the United States of
America at the Class Interest Rate on the dates as provided herein. Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings given to such terms in the Indenture dated as of March 27,
1997 (the "Indenture"), as amended on the Closing Date and as supplemented by
the Second Terms Supplement dated as of June 25, 1997, (the "Second Terms
Supplement" and, together with the Indenture, the "Indenture") between the
Issuer and Bankers Trust Company, as Indenture Trustee as further amended and
supplemented from time to time.
This is one of a duly authorized issue of notes of the
Issuer designated as "PNC Student Loan Trust I, Series 1997-2, Senior Fixed
Rate Class [A-2][A-3][A-4][A-5][A-6][A-7] Asset Backed Notes", in the
aggregate principal amount of $_________ (herein referred to as the "Class
[A-2][A-3][A-4][A-5][A-6][A-7] Notes" together with the Class A-__ Notes, the
Class A-__ Notes, the Class A-__ Notes, the Class A-___ Notes, the Class A-___
Notes (the "Fixed Rate Notes") and the LIBOR Rate Notes, the "Notes")issued
under the Indenture. The Notes are issued to finance the acquisition of Financed
Student Loans by the Trust, and to make certain deposits into the Pledged
Accounts.
The Notes are secured under the Indenture which, together
with certain other documents, assigns to the Indenture Trustee for the benefit
of the Noteholders and each Swap Counterparty all the rights and remedies of
the Issuer under certain Financed Student Loans and rights under various
contracts providing for the issuance, guarantee and servicing of such Financed
Student Loans. Reference is hereby made to the Indenture for the provisions,
among others, with respect to the custody and application of the proceeds of
the Notes, the nature and the extent of the liens and security of the
Indenture, the collection and disposition of revenues, the funds charged with
and pledged to the payment of the principal of and the interest on the Notes,
the rights, duties and immunities of the Indenture Trustee, the rights of the
registered owners of the Notes, and the rights and obligations of the Issuer.
By the acceptance of this Fixed Rate Note, the registered owner hereof assents
to all of the provisions of the Indenture.
Distributions of principal and interest will made on each
Quarterly Distribution Date to the holders of this Fixed
2
<PAGE> 26
Rate Note in the manner described in the Transfer and Servicing Agreement until
the principal balance of this Fixed Rate Notes is reduced to zero
If an Event of Default as defined in the Indenture occurs,
the principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The holder of this Fixed Rate Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Fixed Rate Note may be registered only
upon surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in
such form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Fixed Rate Note and subject to the payment of
any fees and charges as provided by the Indenture, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange for this Fixed
Rate Note a new Fixed Rate Note or Notes registered in the name of the
transferee, in any denomination or denominations authorized by the Indenture,
of the same maturity and in an aggregate principal amount equal to the
unredeemed principal amount of this Fixed Rate Note and bearing the same
interest as this Fixed Rate Note.
In any case where the date fixed for the payment of principal
of or interest on this Fixed Rate Note shall not be a Business Day, then
payment of such principal or interest need not be made on such date but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution and delivery of the Indenture and
issuance of this Fixed Rate Note have happened, do exist and have been
performed in due time, form and manner as required by law.
3
<PAGE> 27
This Fixed Rate Note shall not be valid or become obligatory
for any purpose or be entitled to any security or benefit under the Indenture
until the certificate of authentication hereon shall have been manually signed
by the Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this Fixed Rate
Note to be executed in its name by the manual or facsimile signature of an
Authorized Officer and the manual or facsimile signature of an Assistant
Secretary, and has caused its corporate seal or a facsimile thereof to be
hereto affixed.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By: ____________________________________
4
<PAGE> 28
CERTIFICATE OF AUTHENTICATION
This Note is one of the Fixed Rate Notes designated in and
issued under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By: _________________________
Authorized Representative
Date of Authentication:
- -----------------------
5
<PAGE> 29
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto _________________________, the within Note and irrevocably
appoints _____________________________________, attorney-in-fact, to transfer
the within Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
6
<PAGE> 30
EXHIBIT A-3
[FORM OF SUBORDINATE LIBOR RATE NOTE]
PNC STUDENT LOAN TRUST I, SERIES 1997-2
SUBORDINATE LIBOR RATE CLASS B ASSET BACKED NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR INTEREST IN PNC
BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF CHICAGO, FIRST CHICAGO
DELAWARE, INC. OR BANKERS TRUST COMPANY.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
No. B-_____ $__________
<TABLE>
<CAPTION>
FINAL CLASS
MATURITY DATED INTEREST
Class DATE DATE RATE CUSIP
----- ---- ---- ---- -----
<S> <C>
B One-Month
LIBOR +____%
as herein
provided
</TABLE>
REGISTERED NOTEHOLDER: CEDE & CO.
PRINCIPAL AMOUNT: -----------------------
PNC BANK STUDENT LOAN TRUST I, a Delaware business trust (the
"Issuer"), for value received, promises to pay, from the sources herein
described, to the Registered Noteholder identified above, or registered assigns,
upon presentation and surrender hereof at the Corporate Trust Office of Bankers
Trust Company, as Paying Agent, or at the principal office of any successor or
additional Paying Agent, the Principal Amount
1
<PAGE> 31
identified above on the Final Maturity Date identified above, and to pay to the
registered owner hereof, interest and principal hereon in lawful money of the
United States of America at the Class Interest Rate on the dates as provided
herein. Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings given to such terms in the Indenture dated as of
March 27, 1997 (the "Indenture"), as amended on the Closing Date and as
supplemented by the Second Terms Supplement dated as of June 25, 1997, (the
"Second Terms Supplement" and, together with the Indenture, the "Indenture")
between the Issuer and Bankers Trust Company, as Indenture Trustee as further
amended and supplemented from time to time.
This is one of a duly authorized issue of notes of the Issuer
designated as "PNC Student Loan Trust I, Series 1997-2, Subordinate LIBOR Rate
Class B Asset Backed Notes", in the aggregate principal amount of $36,050,000
(herein referred to as the "Class B Notes" together with the Class A Notes, the
"Notes") issued under the Indenture. The Notes are issued to finance the
acquisition of Financed Student Loans by the Trust, and to make certain
deposits into the Pledged Accounts.
The Notes are secured under the Indenture which, together
with certain other documents, assigns to the Indenture Trustee for the benefit
of the Noteholders and each Swap Counterparty all the rights and remedies of
the Issuer under certain Financed Student Loans and rights under various
contracts providing for the issuance, guarantee and servicing of such Financed
Student Loans. Reference is hereby made to the Indenture for the provisions,
among others, with respect to the custody and application of the proceeds of
the Notes, the nature and the extent of the liens and security of the
Indenture, the collection and disposition of revenues, the funds charged with
and pledged to the payment of the principal of and the interest on the Notes,
the rights, duties and immunities of the Indenture Trustee, the rights of the
registered owners of the Notes, and the rights and obligations of the Issuer.
By the acceptance of this Class B Note, the registered owner hereof assents to
all of the provisions of the Indenture.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS B NOTES
ARE SUBORDINATED IN PRIORITY OF PAYMENT TO DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS A NOTES AND TRUST SWAP PAYMENTS UNDER THE SWAP
AGREEMENTS AS DESCRIBED IN THE SECOND TERMS SUPPLEMENT AND THE TRANSFER AND
SERVICING AGREEMENT.
Distributions of principal and interest on this Class B Note
will made to the holders of Class B Notes in the manner described in the
Transfer and Servicing Agreement until the principal balance of the Class B
Notes is reduced to zero.
The rate of interest on the Class B Notes shall be determined
in accordance with the Second Terms Supplement.
2
<PAGE> 32
If an Event of Default as defined in the Indenture occurs,
the principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The holder of this Class B Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Class B Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in
such form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Class B Note and subject to the payment of any
fees and charges as provided by the Indenture, the Issuer shall execute and the
Indenture Trustee shall authenticate and deliver in exchange for this Class B
Note a new Class B Note or Notes registered in the name of the transferee, in
any denomination or denominations authorized by the Indenture, of the same
maturity and in an aggregate principal amount equal to the unredeemed principal
amount of this Class B Note and bearing the same interest as Class B Note.
In any case where the date fixed for the payment of principal
of or interest on this Class B Note shall not be a Business Day, then payment
of such principal or interest need not be made on such date but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution and delivery of the Indenture and
issuance of this Class B Note have happened, do exist and have been performed
in due time, form and manner as required by law.
This Class B Note shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the Indenture until
the certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
3
<PAGE> 33
IN WITNESS WHEREOF, the Issuer has caused this Class B Note
to be executed in its name by the manual or facsimile signature of an
Authorized Officer and the manual or facsimile signature of an Assistant
Secretary, and has caused its corporate seal or a facsimile thereof to be
hereto affixed.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By: ____________________________________
4
<PAGE> 34
CERTIFICATE OF AUTHENTICATION
This Note is one of the Class B Notes designated in and
issued under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
--------------------------
Authorized Representative
Date of Authentication:
- -----------------------
5
<PAGE> 35
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto _________________________, the within Note and irrevocably
appoints _______________________________________, attorney-in-fact, to transfer
the within Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
6
<PAGE> 1
EXHIBIT 4.4
Amendment No. 1 dated as of June 25, 1997 to the Trust Agreement dated
as of March 27, 1997, among PNC BANK, NATIONAL ASSOCIATION, as Depositor (the
"Depositor"), The First National Bank of Chicago, as Eligible Lender Trustee
(the "Eligible Lender Trustee") and First Chicago Delaware Inc., as Delaware
Trustee (the "Delaware Trustee").
WHEREAS, the Issuer desires to, among other things, issue an additional
Series of Notes; and
WHEREAS, in connection with the issuance of such additional Series of
Notes the parties hereto desire to make certain amendments to the Trust
Agreement dated as of March 27, 1997 among the Depositor, the Eligible Lender
Trustee and the Delaware Trustee (the "Trust Agreement").
NOW, THEREFORE, the parties hereto agree as follows:
Capitalized but undefined terms used herein shall have the meanings set
forth in the Original Trust Agreement.
SECTION 1. Amendment to Exhibit A. Exhibit A to the Trust Agreement is
hereby amended to read as set forth on Annex A hereto.
SECTION 2. Amendment to Appendix A. Appendix A to the Trust Agreement
is hereby amended to read as set forth in Annex B hereto.
SECTION 3. Separate Counterparts. This Amendment No. 1 may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 4. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 5. Governing Law. This Amendment No. 1 shall be construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to the Trust Agreement to be duly executed by their respective
officers hereunto duly authorized, as of the day and year first above written.
THE FIRST NATIONAL BANK OF
CHICAGO, as Eligible Lender
Trustee
By: /s/ Steve M. Husbands
-------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
By: /s/ Melissa G. Weisman
-------------------------
Name: Melissa G. Weisman
Title: Vice President
PNC BANK, NATIONAL
ASSOCIATION, as Depositor,
By: /s/ Bryan W. Ridley
-------------------------
Name: Bryan W. Ridley
Title: Senior Vice President
<PAGE> 3
Annex A
FORM OF TRUST CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF,
BY PURCHASING THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3)
UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT, OR (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY
TO (1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT
ACCOUNTS OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY
GENERAL ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY
SUCH PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER,
THIS TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN
THE MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
THIS TRUST CERTIFICATE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR
AN INTEREST IN PNC BANK, NATIONAL ASSOCIATION, THE FIRST NATIONAL BANK OF
CHICAGO OR FIRST CHICAGO DELAWARE INC.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY.
AS LONG AS THE SERIES 1997-I NOTES ARE OUTSTANDING, THIS TRUST
CERTIFICATE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR
WRITTEN CONSENT OF SMITH BARNEY MORTGAGE CAPITAL GROUP, INC., WHICH SHALL NOT BE
UNREASONABLY WITHHELD.
A-1
<PAGE> 4
Original Denomination:
Principal Balance:
PNC STUDENT LOAN TRUST I
ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans sold to
the Trust by PNC Bank, National Association (the "Seller").
THIS CERTIFIES THAT is the registered owner
of a dollars non-assessable, fully-paid, fractional undivided
interest in the PNC Student Loan Trust I (the "Trust"), a business trust formed
under the laws of Delaware by PNC Bank, National Association (the "Depositor").
The Trust was created pursuant to a Trust Agreement dated as of March 27, 1997
and amended as of June 25, 1997 (the "Trust Agreement") between the Depositor
and The First National Bank of Chicago, as eligible lender trustee (the
"Eligible Lender Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in Appendix A
to the Trust Agreement; such Appendix A also contains rules as to usage that
shall be applicable herein.
This Certificate is one of the duly authorized Certificates
designated as "PNC Student Loan Trust I Asset Backed Certificates" (herein
called the "Trust Certificates"). Issued under the Master Indenture dated as of
March 27, 1997, and amended and supplemented on June 25, 1997, between the Trust
and Bankers Trust Company, as Indenture Trustee, will be one or more series of
notes, each series to be issued under a separate terms agreement (such notes
referred to herein as, collectively, the "Notes"). This Trust Certificate is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Trust Certificate by
virtue of the acceptance hereof assents and by which such holder is bound. The
property of the Trust includes a pool of student loans (the "Financed Student
Loans"), all moneys paid thereunder on or after the Cut-off Date certain bank
accounts and the proceeds thereof and certain other rights under the Trust
Agreement and the Transfer and Servicing Agreement and all proceeds of the
foregoing. The rights of the holders of the Trust Certificates to the assets of
the Trust are subordinated to the rights of the holders of the Notes, as set
forth in the Transfer and Servicing Agreement.
Under the Trust Agreement, distributions will be made
A-2
<PAGE> 5
on the Trust Certificates on each Quarterly Distribution Date in the manner set
forth in the Trust Agreement and the Transfer and Servicing Agreement.
Each holder of this Trust Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Trust Certificate
from Available Funds and amounts on deposit in the Reserve Account are
subordinated to the rights of the Noteholders as described in the Transfer and
Servicing Agreement and the Indenture.
Each Certificateholder, by its acceptance of a Trust
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Depositor or the Trust, or join in any institution
against the Depositor or the Trust, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the other Basic Documents.
Each Certificateholder, by its acceptance of a Trust
Certificate, (i) agrees, for federal, state and local income and franchise tax
purposes, to treat the Trust as a partnership, with the assets of the
partnership being the Financed Student Loans and other assets held by the
Trust, the partners of the partnership being the Certificateholders and the
Notes being debt of the partnership, and (ii) acknowledges that the Trust will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Trust as a partnership for
federal, state and local and franchise tax purposes and that the Administrator
will not make, or cause to be made, an election under the provisions of
Treasury Regulation Section 301.7701.3 to classify the Trust as an association.
Distributions on this Trust Certificate will be made as
provided in the Trust Agreement by the Eligible Lender Trustee by wire transfer
or by check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Trust Certificate or the
making of any notation hereon.
Reference is hereby made to the further provisions of this
Trust Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized representative of the Eligible Lender Trustee or
its authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the
Transfer and Servicing Agreement or be valid for any purpose.
A-3
<PAGE> 6
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of
the Trust and not in its individual capacity has caused this Trust Certificate
to be duly executed as of the date set forth below.
PNC STUDENT LOAN TRUST I
By: The First National Bank of
Chicago, not in its
individual capacity but
solely as Eligible Lender
Trustee,
By:_____________________________
Authorized Signatory
Date:
A-4
<PAGE> 7
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee,
By:_____________________________
Authorized Representative
Date:
A-5
<PAGE> 8
[Reverse of Trust Certificate]
The Trust Certificates do not represent an obligation of, or
an interest in, the Depositor, the Master Servicer, the Administrator, the
Eligible Lender Trustee or any affiliates of any of them, and no recourse may
be had against such parties or their assets, except as may be expressly set
forth herein, in the Trust Agreement or in the other Basic Documents. In
addition, this Trust Certificate is not guaranteed by any governmental agency
or instrumentality and is limited in right of payment to certain collections
respecting the Financed Student Loans, all as more specifically set forth in
the Transfer and Servicing Agreement. A copy of each of the Transfer and
Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Depositor, and at such other
places, if any, designated by the Depositor, by any Certificateholder upon
request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Transferor and the rights of the Certificateholders under
the Trust Agreement at any time by the Depositor and the Eligible Lender
Trustee with the consent of the Majority Certificateholders. Any such consent
by the holder of this Trust Certificate shall be conclusive and binding on such
holder and on all future holders of this Trust Certificate and of any Trust
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Trust
Certificate. The Trust Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the holders of any of the Trust
Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by The First
National Bank of Chicago in its capacity as Certificate Registrar, or by any
successor Certificate Registrar, accompanied by a written instrument of
transfer in form satisfactory to the Eligible Lender Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Trust
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
A-6
<PAGE> 9
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in minimum denominations of $1.00 and integral
multiples thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new
Trust Certificates of authorized denominations evidencing the same percentage
interest, as requested by the holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange, but the
Eligible Lender Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Eligible Lender Trustee, the Certificate Registrar and
any agent of the Eligible Lender Trustee and the Certificate Registrar may
treat the person in whose name this Trust Certificate is registered as the
owner hereof for all purposes, and none of the Eligible Lender Trustee or the
Certificate Registrar or any such agent shall be affected by any notice to the
contrary.
This Trust Certificate may not be transferred directly or
indirectly to (1) employee benefit plans, retirement arrangements, individual
retirement accounts or Keogh plans subject to either Title I of the Employee
Retirement Income Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986, as amended, or (2) entities (including insurance
company general accounts) whose underlying assets include plan assets by reason
of any such plan's arrangements or account's investment in such entities. By
accepting and holding this Trust Certificate, the Holder hereof shall be deemed
to have represented and warranted that it is not any of the foregoing entities.
This Trust Certificate may not be transferred to any person
who is not a U.S. Person, as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code, as amended.
Each purchaser of the Trust Certificates shall be required,
prior to purchasing a Trust Certificate, to execute the Purchaser's
Representation and Warranty Letter in the form attached to the Trust Agreement
as Exhibit B.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Transfer and Servicing Agreement and the disposition of
all property held as part of the Trust.
This Trust Certificate shall be construed in accordance with
the laws of the State of Delaware, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
A-7
<PAGE> 10
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________________ Attorney to transfer
said Trust Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
________________________________*
Signature Guaranteed:
________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an approved eligible guarantor institution, an institution which
is a participant in a Securities Transfer Association recognized signature
guarantee program.
A-8
<PAGE> 11
ANNEX B
APPENDIX A
TO THE
TRUST AGREEMENT
DEFINITIONS AND USAGE
Usage
-----
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Appendix or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Appendix or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of such instrument. To
the extent that the definitions of accounting terms in this Appendix or in any
such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Appendix or in any such instrument, certificate
or other document shall control.
(c) The words "hereof", "herein", "hereunder" and words of
similar import when used in an instrument refer to such instrument as a whole
and not to any particular provision or subdivision thereof; references in an
instrument to "Article", "Section" or another subdivision or to an attachment
are, unless the context otherwise requires, to an article, section or
subdivision of or an attachment to such instrument; and the term "including"
means "including without limitation".
(d) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to below or in any agreement or instrument that is
<PAGE> 12
governed by this Appendix means such agreement or instrument or statute as from
time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted
successors and assigns.
Definitions
"Act" has the meaning specified in Section 11.3(a) of the
Indenture.
"Adjustment Payments" has the meaning set forth in Section
2.3(e) of the Transfer and Servicing Agreement.
"Administration Agreement" means the Administration Agreement
dated as of March 27, 1997, among the Issuer, the Indenture Trustee and the
Administrator, as amended from time to time.
"Administration Fee" has the meaning specified in Section 3
of the Administration Agreement.
"Administrator" means PNC Bank, National Association, in its
capacity as administrator of the Issuer and the Financed Student Loans, or any
successor as Administrator under the Transfer and Servicing Agreement.
"Administrator Default" has the meaning specified in Section
8.1(b) of the Transfer and Servicing Agreement.
"Administrator's Certificate" means an Officer's Certificate
of the Administrator delivered pursuant to Section 4.7 of the Transfer and
Servicing Agreement, substantially in the form of Exhibit C thereto and as the
Administrator and the Indenture Trustee may agree.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
2
<PAGE> 13
"AFSA" means the AFSA Data Corporation.
"Authenticating Agent" means the Person appointed by the
Indenture Trustee at the request of the Issuer as Authenticating Agent for the
Notes pursuant to Section 2.3(8) of the Indenture, and any successor
Authenticating Agent for the Notes.
"Authorized Officer" means (i) with respect to the Issuer,
any officer of the Eligible Lender Trustee who is authorized to act for the
Eligible Lender Trustee in matters relating to the Issuer pursuant to the Basic
Documents and who is identified on the list of Authorized Officers delivered by
the Eligible Lender Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter), (ii)
with respect to the Administrator, any officer of the Administrator who is
authorized to act for the Administrator in matters relating to itself or to the
Issuer and to be acted upon by the Administrator pursuant to the Basic
Documents and who is identified on the list of Authorized Officers delivered by
the Administrator to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter), (iii) with
respect to the Transferor, any officer of the Transferor who is authorized to
act for the Transferor in matters relating to or to be acted upon by the
Transferor pursuant to the Basic Documents and who is identified on the list of
Authorized Officers delivered by the Transferor to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter) and (iv) with respect to a Servicer, any officer of such Servicer
who is authorized to act for such Servicer in matters relating to or to be
acted upon by such Servicer pursuant to the Basic Documents and who is
identified on the list of Authorized Officers delivered by such Servicer to the
Indenture Trustee, on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Available Funds" means, with respect to any Collection
Period, the excess of (A) the sum, without duplication, of the following
amounts with respect to such Collection Period: (i) all collections received by
the Master Servicer or any Servicer on the Financed Student Loans (including
any Guarantee Payments received with respect to the Financed Student Loans)
during such Collection Period; (ii) any payments, including without limitation
Interest Subsidy Payments and Special Allowance Payments, received by the
Eligible Lender Trustee during such Collection Period with respect to Financed
Student Loans; (iii) all proceeds from any sales of Financed Student Loans by
the
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<PAGE> 14
Trust during such Collection Period; (iv) any payments of or with respect to
interest received by the Master Servicer or a Servicer during such Collection
Period with respect to a Financed Student Loan for which a Realized Loss was
previously allocated; (v) the aggregate Purchase Amounts received for those
Financed Students Loans purchased by the Transferor or purchased by the Master
Servicer under an obligation which arose during the related Collection Period;
(vi) the aggregate amounts, if any, received from the Transferor or the Master
Servicer, as the case may be, as reimbursement of non-guaranteed interest
amounts, lost Interest Subsidy Payments and Special Allowance Payments, with
respect to the Financed Student Loans pursuant to Section 3.2 or Section 4.5,
respectively, of the Transfer and Servicing Agreement (vii) all Adjustment
Payments, if any, received from the Transferor during such Collection Period and
(viii) Investments Earnings for such Collection Period over (B) the Issuer
Consolidation Payments for such Collection Period; provided, however, that
Available Funds will exclude all payments and proceeds of any Financed Student
Loans the Purchase Amount of which has been included in Available Funds for a
prior Collection Period, which payments and proceeds shall be paid to the
Transferor, and amounts used to reimburse the Master Servicer for Monthly
Advances pursuant to Section 5.4 of the Transfer and Servicing Agreement. For
any Distribution Date the term Available Funds also includes any Counterparty
Swap Payments received with respect to such Distribution Date.
"Basic Documents" means the Trust Agreement, the Master
Indenture, the Terms Supplement, the Transfer and Servicing Agreement, the
Administration Agreement, the Note Depository Agreement, the Guarantee
Agreements, the Underwriting Agreement and other documents and certificates
delivered in connection with any thereof and all amendments and supplements
thereto.
"Benefit Plan" means any employee benefit plan, retirement
arrangement, individual retirement account or Keogh Plan subject to either
Title I of ERISA or Section 4975 of the Code, or any entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of a plan's investment in the entity.
"Book-Entry Note" means a beneficial interest in the Notes,
ownership and transfers of which shall be through book entries by a Securities
Depository as described in Section 2.14 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which national banking associations or banking
4
<PAGE> 15
institutions or trust companies in New York are authorized or obligated by law,
regulation or executive order to remain closed.
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A to the Trust Agreement.
"Certificate Balance" equals, initially, the Initial
Certificate Balance and, thereafter, equals the Initial Certificate Balance
reduced by all amounts previously distributed to Certificateholders as
principal. In determining whether the Certificateholders which hold
Certificates representing the requisite Certificate Balance have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or under any other Basic Document, the Certificate Balance shall not include
the principal balance of Certificates owned by the Transferor or any Affiliate
of the Transferor.
"Certificate Distribution Account" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Transfer and Servicing Agreement.
"Certificate Monthly Advance Account" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Transfer and Servicing Agreement.
"Certificate Paying Agent" means any paying agent or
co-paying agent appointed pursuant to Section 3.10 of the Trust Agreement,
which shall initially be the Eligible Lender Trustee.
"Certificate Initial Rate" means 7.1875% per annum.
"Certificate Rate" means One-Month LIBOR plus 1.50%.
"Certificate Register" and "Certificate Registrar" means the
register mentioned and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificateholder" means a Person in whose name a
Certificate is registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, with respect
to any Distribution Date, the Certificateholders' Interest Distribution Amount
for such Distribution Date plus, for each Distribution Date on and after the
Notes have been paid in full, the Certificateholders' Principal Distribution
Amount for such Distribution Date.
"Certificateholders' Interest Carryover Shortfall"
5
<PAGE> 16
means, with respect to any Quarterly Distribution Date, the excess, if any, of
(i) the sum of the related Certificateholders' Interest Distribution Amount on
the preceding Quarterly Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Quarterly
Distribution Date over (ii) the amount of interest actually distributed to such
Certificateholders on such preceding Quarterly Distribution Date, plus interest
on the amount of such excess interest due to such Certificateholders, to the
extent permitted by law, at the related Certificate Rate from such preceding
Quarterly Distribution Date to the current Quarterly Distribution Date.
"Certificateholders' Interest Distribution Amount" means,
with respect to Quarterly Distribution Date, the sum of (i) the amount of
interest accrued at One-Month LIBOR plus 1.50% per annum for each related
Interest Period since the last Quarterly Distribution Date on the outstanding
Certificate Balance on the immediately preceding Quarterly Distribution Date,
after giving effect to all distributions of principal to Certificateholders on
such Quarterly Distribution Date (or, in the case of the first Quarterly
Distribution Date, on the Closing Date) and (ii) the Certificateholders'
Interest Carryover Shortfall for such Quarterly Distribution Date.
"Certificateholders' Principal Carryover Shortfall" means, as
of the close of Quarterly Distribution Date on or after which the Notes have
been paid in full, the excess, if any, of (i) the sum of the
Certificateholders' Principal Distribution Amount on such Quarterly
Distribution Date and any outstanding Certificateholders' Principal Carryover
Shortfall for the preceding Quarterly Distribution Date over (ii) the amount of
principal actually distributed to the Certificateholders on such Quarterly
Distribution Date.
"Certificateholders' Principal Distribution Amount" means, on
each Quarterly Distribution Date on and after the date when the principal
balance of each Class of Notes has been paid in full, the sum of (a) the
Principal Distribution Amount for the three Collection Periods preceding such
Quarterly Distribution Date and (b) the Certificateholders' Principal Carryover
Shortfall as of the close of the preceding Quarterly Distribution Date;
provided, however, that the Certificateholders' Principal Distribution Amount
will in no event exceed the outstanding principal balance of the Certificates.
Further, on the first Quarterly Distribution Date occurring on or after the
Quarterly Distribution Date on which the principal balance of the last
Outstanding Class of Notes is paid in full, the Certificateholders' Principal
Distribution Amount also will
6
<PAGE> 17
include the excess, if any, of the amount of principal available to be
distributed on such Quarterly Distribution Date over the amount of principal
paid on the Notes on such date.
"Class" means any class of Notes.
"Class A Notes" means the Class A-1, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class A-7 Notes,
Class A-8 Notes and the Class A-9 Notes.
"Class A-1 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-1 Asset
Backed Notes."
"Class A-1 Noteholder" means any Noteholder of the Class A-1
Notes.
"Class A-2 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-2 Asset
Backed Notes."
"Class A-2 Noteholder" means any Noteholder of the Class A-2
Notes.
"Class A-3 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-3 Asset
Backed Notes."
"Class A-3 Noteholder" means any Noteholder of the Class A-3
Notes.
"Class A-4 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-4 Asset
Backed Notes."
"Class A-4 Noteholder" means any Noteholder of the Class A-4
Notes.
"Class A-5 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-5 Asset
Backed Notes."
"Class A-5 Noteholder" means any Noteholder of the Class A-5
Notes.
"Class A-6 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-6 Asset
Backed Notes."
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<PAGE> 18
"Class A-6 Noteholder" means any Noteholder of the Class A-6
Notes.
"Class A-7 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-7 Asset
Backed Notes."
"Class A-7 Noteholder" means any Noteholder of the Class A-7
Notes.
"Class A-8 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-8 Asset
Backed Notes."
"Class A-8 Noteholder" means any Noteholder of the Class A-8
Notes.
"Class A-9 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-9 Asset
Backed Notes."
"Class A-9 Noteholder" means any Noteholder of the Class A-9
Notes.
"Class B Notes" means Notes of the Issuer designated as "PNC
Student Loan Trust I, Series 1997-2, Subordinate LIBOR Rate Class B Asset
Backed Notes."
"Class B Noteholder" means any Noteholder of the Class B
Notes.
"Class Initial Rate" means, with respect to any Class of
Notes, the rate identified as such in the Terms Supplement.
"Class Interest Rate" means, with respect to any Class of
Notes, the interest rate determined as set forth in the Terms Supplement.
"Closing Date" means June 25, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
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<PAGE> 19
"Collection Period" means, initially, with respect to each of
the Initial Financed Student Loans, the period beginning on the day immediately
succeeding the applicable Cut-off Date and ending on June 30, 1997, inclusive,
and thereafter, the Collection Period means the calendar month immediately
following the end of the previous Collection Period.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loan" means a Federal Loan designated as such,
made by the Transferor to an eligible borrower that represents the refinancing
of student loans to such borrower and his or her spouse in accordance with the
applicable terms and provisions of the Higher Education Act.
"Consolidation Loan Fees" means, as to any Collection Period,
an amount accrued during such Collection Period equal to 1.05% per annum of the
average outstanding principal balance of the Consolidation Loans owned by the
Trust during such Collection Period.
"Consolidation Prepayments" means, on any Exchange Date, the
amount of principal then on deposit in the Collection Account representing
payments received as a result of Financed Student Loans being repaid with the
proceeds of consolidation loans (provided, however, if an Exchange Date occurs
during the month of a Distribution Date, Consolidation Prepayments shall not
include amounts received during the month of such Distribution Date).
"Corporate Trust Office" means (i) with respect to the
Indenture Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
on the Closing Date is located at Four Albany Street, New York, New York 10006
Attention: Corporate Trust and Agency Group, Structured Finance Group
(telephone: (212) 250-6652; facsimile: (212) 250-6439) or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Certificateholder and the Transferor, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and the Transferor)
and (ii) with respect to the Eligible Lender Trustee, the principal corporate
trust office of the Eligible Lender Trustee located at One First National Plaza,
Suite 0126, Chicago, Illinois 60670, Attention: Steven Husbands telephone: (312)
407-1892; facsimile (312) 407-1708;] or at such other address as the Eligible
Lender Trustee may designate by notice to the
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<PAGE> 20
Certificateholders and the Transferor, or the principal corporate trust office
of any successor Eligible Lender Trustee (the address of which the successor
Eligible Lender Trustee will notify the Certificateholders and the Transferor).
"Counterparty" means any Person who from time to time is a party to a
Swap Agreement with the Trust, which Persons are initially Deutsche Bank AG,
New York Branch and Morgan Guaranty Trust Company of New York.
"Counterparty Swap Payment" means, as to the Swap Agreements, with
respect to any Quarterly Distribution Date, the excess, if any, of (i) the
aggregate of the amounts accrued during the three Interest Periods immediately
preceding such Quarterly Distribution Date (or, in the case of the first
Quarterly Distribution Date, since the Closing Date) on the Notional Amount of
the Swap Agreements at the fixed rates set forth therein (calculated on the
basis of a year consisting of 12 months of 30 days each) over (ii) the
aggregate amounts payable under the Swap Agreements on such Quarterly
Distribution Date by the Trust to the Counterparties.
"Cut-off Date" means for the Financed Student Loans set forth
on (i) Schedule A-1 to the Transfer and Servicing Agreement, the close of
business on June 6, 1997 and (ii) Schedule A-2 to the Transfer and Servicing
Agreement, the close of business on June 17, 1997.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Deferral Phase" means the period during which the related
borrower is in school and for certain authorized periods as described in the
Higher Education Act.
"Definitive Notes" has the meaning specified in Section 2.14
of the Indenture.
"Delivery" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to,
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<PAGE> 21
or registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313) of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles
8 and 9 of the
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UCC: book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Indenture Trustee or
its nominee or custodian and indicating that such custodian holds such
Trust Account Property solely as agent for the Indenture Trustee or its
nominee or custodian; and such additional or alternative procedures as
may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee
or its nominee or custodian, consistent with changes in applicable law
or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that
is an uncertificated security under Article 8 of the UCC and that is
not governed by clause (b) above, registration on the books and
records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Indenture Trustee
or its nominee or custodian.
"Department" means the United States Department of Education,
an agency of the Federal government.
"Depositor" means PNC Bank, National Association in its
capacity as Depositor under the Trust Agreement.
"Determination Date" means, with respect to any Distribution
Date, the fifth Business Day preceding such Distribution Date.
"Distribution" means, with respect to any Financed Student
Loan, the amount of the monthly remittance payable to the holder of such
Financed Student Loan in accordance with its terms.
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"Distribution Date" means the 25th day of each January,
April, July and October (or in the case of the Class A-1 Notes, monthly on the
25th day of each month and on July 20, 1998), or if any such day is not a
Business Day, the next succeeding Business Day, in each case commencing July
25, 1997.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the States (or any domestic
branch of a foreign bank), having corporate trust powers and acting as trustee
for funds deposited in such account, so long as any of the securities of such
depository institution have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade. An Eligible
Deposit Account may not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" means an entity which is an
institution whose deposits are insured by the FDIC and the unsecured and
uncollateralized long-term debt obligations of which shall be rated "AA-" or
better by Standard & Poor's, A2 or better by Moody's, and if rated by Fitch,
"AA" or better by Fitch, or the highest short-term rating by Standard & Poor's,
the highest short term rating by Moody's and if rated by Fitch, the highest
short term rating by Fitch, and which is either (i) a federal savings
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, or (iv) a principal subsidiary of a
bank holding company.
"Eligible Investments" As used herein, Eligible Investments
shall include the following:
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation);
(2) Direct obligations of (including obligations issued or held
in book entry form on the books of) the Department of the
Treasury of the United States of America;
(3) obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United
States of America, including:
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<PAGE> 24
- Export-Import Bank
- Farm Credit System Financial Assistance Corporation
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development (PHA's)
- Federal Housing Administration;
(4) senior debt obligations rated "AAA" by Standard & Poor's,
"Aaa" by Moody's and if rated by Fitch, "AAA" by Fitch issued
by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation
(5) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which
have a rating on their short term certificates of deposit on
the date of purchase of "A-1+" by Standard & Poor's, "P-1" by
Moody's and if rated by Fitch, "F-1+" by Fitch and maturing
no more than 360 days after the date of purchase (ratings on
holding companies not being considered the rating of the
bank);
(6) commercial paper which is rated at the time of purchase in
the single highest classification, "A-1+" by Standard &
Poor's, "P-1" by Moody's and if rated by Fitch, "F-1+" by
Fitch and which matures not more than 270 days after the date
of purchase;
(7) Investments in money market funds (including, but not limited
to, money market mutual funds) rated "AAAm" or "AAAm-G" or
better by Standard & Poor's and if rated by Fitch, "AAA" by
Fitch;
(8) investment agreements acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment; and
(9) other forms of investments acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment.
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Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, for so long as the Transferor is a Certificateholder, all
investments of the Trust shall be made in investments permissible for a
national bank.
The value of the above investments shall be determined as follows:
a) as to investments the bid and asked prices of which are
published on a regular basis in The Wall Street Journal (or,
if not there, then in The New York Times): the average of the
bid and asked prices for such investments so published on or
most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not
published on a regular basis in The Wall Street Journal or
The New York Times: the average bid price at such time of
determination for such investments by any two nationally
recognized government securities dealers (selected by the
Indenture Trustee in its absolute discretion) at the time
making a market in such investments or the bid price
published by a nationally recognized pricing service;
c) as to certificates of deposit and bankers acceptances: the
face amount thereof, plus accrued interest; and
d) as to any investment not specified above: the value thereof
established by prior agreement between the Issuer, the
Administrator and the Indenture Trustee.
"Eligible Lender Trustee" means The First National Bank of
Chicago not in its individual capacity but solely as Eligible Lender Trustee
under the Trust Agreement, and its successors and assigns in such capacity.
"Eligible Lender Trustee Fee" has the meaning specified in
Section 8.1 of the Trust Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" has the meaning specified in Section 5.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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<PAGE> 26
"Exchange Date" means, with respect to any Exchanged Student
Loans, the date specified as such in the related Transfer Agreement.
"Exchange Period" means the period commencing on the Closing
Date and ending on June 30, 2002.
"Exchanged Student Loan" means any Federal Loan transferred
to the Eligible Lender Trustee on behalf of the Issuer during the Exchange
Period pursuant to Section 2.2 of the Transfer and Servicing Agreement.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary, the Controller or the Treasurer of such corporation;
and with respect to any partnership, any general partner thereof.
"Expense Account" means the account designated as such
pursuant to Section 5.1 of the Transfer and Servicing Agreement.
"Expenses" means any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and
expenses) of any kind and nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Eligible Lender Trustee or any of its
officers, directors or agents in any way relating to or arising out of the
Trust Agreement, the other Basic Documents, the Trust Estate, the
administration of the Trust Estate or the action or inaction of the Eligible
Lender Trustee under the Trust Agreement or the other Basic Documents.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means, for any date of determination,
the Federal funds (effective) rate as published on page 118 of the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices) on the immediately
preceding Business Day. If no such rate is published on such page on such day,
"Federal Funds Rate" shall mean for any date of determination, the Federal
funds (effective) rate as published by the Federal Reserve Board in the most
recent edition of Federal Reserve Statistical Release No. H.15 (519) that is
available on the Business Day immediately preceding such date.
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<PAGE> 27
"Federal Loan" means a student loan which is a PLUS Loan, SLS
Loan, Consolidation Loan, Stafford Loan or Unsubsidized Stafford Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under Title
III of the Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
"Final Maturity Date" means, with respect to any Note, the
date on which the entire unpaid principal amount of such Note becomes due and
payable as provided in the Terms Supplement.
"Financed Student Loan" means the Federal Loans set forth in
Schedule A-1 and Schedule A-2 to the Transfer and Servicing Agreement and
Schedule A to each Transfer Agreement, as amended or supplemented from time to
time by the Master Servicer to accurately reflect the Financed Student Loans
then subject to the Lien of the Indenture. The Schedule of Financed Student
Loans may be in the form of microfiche or other form of electronic media.
"Financed Student Loan Files" means the documents specified
in Section 3.3 of the Transfer and Servicing Agreement.
"Fitch" means Fitch Investors Service, LP.
"Fixed Rate Notes" means the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class A-7 Notes.
"FNMA" means Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
"Grace Period" means certain grace periods authorized by the
Higher Education Act during which the related borrower's scheduled payments are
deferred.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect
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<PAGE> 28
of the Trust Estate and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guarantee Agreements" means each agreement entered into
between the Eligible Lender Trustee and a Guarantor pursuant to which such
Guarantor guarantees payments on Financed Student Loans.
"Guarantee Payment" means any payment made by a Guaranty
Agency pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"Guarantor" means the Department, the California Student Aid
Commission, an agency of the State of California, the Florida Department of
Education, an agency of the State of Florida, the Georgia Higher Education
Assistance Corporation, a public non-profit corporation, Great Lakes Higher
Education Corporation, a public non-profit corporation, the Illinois Student
Assistance Commission, an agency of the State of Illinois, the Kentucky Higher
Education Assistance Authority, an agency of the Commonwealth of Kentucky, the
Michigan Higher Education Assistance Authority, an autonomous agency of the
Michigan Department of the Treasury, the New Jersey Higher Education Assistance
Authority, an agency of the State of New Jersey, the New Mexico Student Loan
Guarantee Corporation, a New Mexico non-profit corporation, PHEAA and United
States Aid Funds, Inc. a Delaware non-profit corporation and their respective
successors and assigns.
"Guaranty Agency" means any agency which has an agreement
with the Department of Education to be a guarantor of Federal Loans.
"Higher Education Act" means the Higher Education Act of
1965, as amended, together with any rules, regulations and interpretations
thereunder.
"Indenture" means the Master Indenture and the Terms
Supplement, each as amended or supplemented from time to time.
"Indenture Trust Estate" means all money, instruments, rights
and other property that are, from time to time, subject or intended to be
subject to the Lien and security interest of the Indenture for the benefit of
the Noteholders (including all
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<PAGE> 29
property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"Indenture Trustee" means Bankers Trust Company, not in its
individual capacity but solely as Indenture Trustee under the Indenture and its
successors and assigns in such capacity.
"Indenture Trustee Fee" has the meaning specified in Section
6.7 of the Master Indenture, as may be amended pursuant to any amendment to the
Terms Supplement.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Transferor and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Transferor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Transferor or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to
be delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Master Indenture, made by an Independent appraiser or other expert appointed by
an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" and that the signer is Independent
within the meaning thereof.
"Individual Note" means a Note of an initial principal amount
equal to $50,000. A Note of an original principal amount in excess thereof
shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such initial principal amount by $50,000, without regard
to fractions.
"Initial Financed Student Loans" has the meaning specified in
Section 2.1 of the Transfer and Servicing Agreement.
"Initial Certificate Balance" means $1,000, representing the
Certificate Balance as of the Closing Date.
"Initial Pool Balance" means $1,014,231,891, representing the
sum of Pool Balance for the Initial Financed Student Loans set forth on
Schedule A-1 as of the applicable Cut-
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off Date and the Pool Balance for the Initial Financed Student Loans set forth
in Schedule A-2 as of the applicable Cut-off Date.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction
in the premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable Federal or State
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such Person's affairs,
and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Federal or State bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of
an order for relief in an involuntary case under any such law, or the consent
by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure
by such Person generally to pay its debts as such debts become due, or the
taking of action by such Person in furtherance of any of the foregoing.
"Institution of Higher Education" means an institution of
higher education as defined under the Higher Education Act (20 U.S.C.A. Section
1085(b)).
"Interest Period" has the meaning set forth in the Terms
Supplement.
"Interest Subsidy Payments" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on
amounts on deposit in the Trust Accounts to be deposited into the Collection
Account on or prior to such Distribution Date pursuant to Section 5.1(b) of the
Transfer and Servicing Agreement.
"Issuer" means PNC Student Loan Trust I.
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<PAGE> 31
"Issuer Consolidation Payments" has the meaning set forth in
Section 2.3(f) of the Transfer and Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LIBOR Determination Date" means, with respect to any Class
of Notes or the Certificates for which One-Month LIBOR is being determined
other than for the Initial Period, the applicable Rate Determination Date,
which must be a Business Day and London Banking Day.
"LIBOR Rate" means, with respect to the LIBOR Rate Notes or
the Certificates, the related Class Interest Rate or Certificate Rate, as the
case may be, that results from a determination based on One-Month LIBOR and is
determined as described in the Terms Supplement, the Transfer and Servicing
Agreement or the Trust Agreement, as the case may be.
"LIBOR Rate Notes" means the Class A-1 Notes, the Class A-8
Notes, the Class A-9 Notes and the Class B Notes.
"LIBOR Rate Determination Date" has the meaning set forth in
the Terms Supplement.
"Lien" means a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens and any other liens, if
any, which attach to the respective Financed Student Loan by operation of law
as a result of any act or omission by the related Obligor or obligations under
Subservicing Agreements in effect as of the Closing Date.
"London Banking Day" means any Business Day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
"Majority Certificateholder" means the holders of more than
50% of the Certificate Balance of the Certificates without regard to the
Certificates held by the Depositor.
"Master Indenture" means the Indenture dated as of March 27,
1997 and amended on the Closing Date between the Issuer and the Indenture
Trustee, as further amended or supplemented from time to time.
"Master Servicer" means PNC Bank, National Association, and
its permitted successors and assigns, as Master Servicer of
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<PAGE> 32
the Financed Student Loans under the Transfer and Servicing Agreement.
"Master Servicer Default" means an event specified in Section
8.1(a) of the related Transfer and Servicing Agreement or Supplemental Transfer
and Servicing Agreement.
"Minimum Purchase Price" has the meaning set forth in Section
9.1(b) of the Transfer and Servicing Agreement.
"Monthly Advance" means the amount, if any, advanced by the
Master Servicer pursuant to Section 5.10 of the Transfer and Servicing
Agreement with respect to Guarantee Payments or Interest Subsidy Payments
applied for but not received as of the end of the Collection Period immediately
preceding the date such Monthly Advance is made.
"Monthly Advance Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Loan Rate" shall have the meaning set forth in the Terms
Supplement.
"Notes" means the notes issued by the Issuer pursuant to the
Master Indenture and the Terms Supplement.
"Note Depository Agreement" means the agreement dated as of
the Closing Date relating to the Notes among the Issuer, the Indenture Trustee,
the Administrator and the Depository Trust Company, as the initial Securities
Depository.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Note Owner" means, with respect to a Book Entry Note, the
Person who is the owner of such Book Entry Note, as reflected on the books of
the Securities Depository, or on the books of a Person maintaining an account
with such Securities Depository (directly as Securities Depository Participant
or as an indirect participant, in each case in accordance with the rules of
such Securities Depository).
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.6 of the Indenture.
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<PAGE> 33
"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Distribution Amount" means, as to any Class of
Notes, with respect to any Distribution Date, the sum of the related
Noteholders' Interest Distribution Amount and the Noteholders' Principal
Distribution Amount for such Distribution Date.
"Noteholders' Interest Carryover" has the meaning set forth
in the Terms Supplement.
"Noteholders' Interest Carryover Shortfall" means, as to any
Class of Notes, with respect to any Distribution Date, the excess of (i) the
sum of the related Noteholders' Interest Distribution Amount on the preceding
Distribution Date and any Noteholders' Interest Carryover Shortfall on such
preceding Distribution Date over (ii) the amount of interest actually allocated
to such Noteholders on such preceding Distribution Date, plus interest on the
amount of such excess interest due to such Noteholders, to the extent permitted
by law, at the related Class Interest Rate from such preceding Note
Distribution Date to the current Distribution Date.
"Noteholders' Interest Distribution Amount" means, as to any
Class of Notes, with respect to any Distribution Date, the sum of (i) the
amount of interest accrued at the respective Class Interest Rate for each
Interest Period since the last Distribution Date for such Class of Notes (or in
the case of the first Distribution Date, the Closing Date) on the outstanding
principal balance of such Class of Notes on the immediately preceding
Distribution Date relating to such Notes after giving effect to all principal
distributions to holders of Notes of such Class on such date (or, in the case
of the first Distribution Date, the Closing Date) and (ii) the Noteholders'
Interest Carryover Shortfall for such Class for such Distribution Date;
provided, however, that the Noteholders' Interest Distribution Amount will not
include any Noteholders' Interest Carryover.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of (i) the sum of the Noteholders'
Principal Distribution Amount on such Distribution Date and any outstanding
Noteholders' Principal Carryover Shortfall for the preceding Distribution Date
over (ii) the amount of principal actually allocated to the Noteholders on such
Distribution Date.
"Noteholders' Principal Distribution Amount" means, as to any
Distribution Date, the sum of (i) the Principal
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<PAGE> 34
Distribution Amount for the three Collection Periods (or with respect to the
Class A-1 Notes, the one Collection Period) immediately preceding the month of
such Distribution Date (ii) any Parity Percentage Payments to be made on such
Distribution Date, (iii) the Noteholders' Principal Carryover Shortfall as of
the close of the preceding Distribution Date and (iv) the amount, if any,
remaining in deposit in the Note Distribution Account following the preceding
Distribution Date; provided, however, that the Noteholders' Principal
Distribution Amount allocable to a Class of Notes will not exceed the
Outstanding Amount of such Class of Notes. In addition, with respect to each
Class of Notes, on the related Final Maturity Date the Noteholders' Principal
Distribution Amount will include the amount required to reduce the Outstanding
Amount of such Notes to zero.
"Notional Amount" means as to any Swap Agreement, with
respect to any Quarterly Distribution Date, the percentage of the original
Outstanding Amount of the related Class of Fixed Rate Notes set forth on the
Scheduled Principal Balance Table for such Class for the Quarterly Distribution
Date immediately preceding such Quarterly Distribution Date (or in the case of
the first Quarterly Distribution Date, the original Outstanding Amount of such
Class).
"Obligor" on a Financed Student Loan means the borrower or
co-borrowers of such Financed Student Loan and any other Person who owes
payments in respect of such Financed Student Loan, including (i) the Guaranty
Agency thereof and (ii) with respect to any Interest Subsidy Payment or Special
Allowance Payment, if any, thereon, the Department.
"Officer's Certificate" means (i) in the case of the Issuer,
a certificate signed by an Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Transferor, the Master Servicer or the
Administrator, a certificate signed by an Authorized Officer of the Transferor,
the Master Servicer or the Administrator, as appropriate and (iii) in the case
of the Servicer, a certificate signed by an Authorized Officer of the Servicer.
"One-Month LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of one month commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of
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<PAGE> 35
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Master Servicer will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Master Servicer, at
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
for loans in U.S. dollars to leading European banks having the Index Maturity
and in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR in effect for the applicable Interest Period will
be One-Month LIBOR in effect for the previous Interest Period.
"Opinion of Counsel" means (i) with respect to the Issuer,
one or more written opinions of counsel who may, except as otherwise expressly
provided in the Master Indenture, be employees of or counsel to the Issuer or
Administrator or any of their Affiliates and who shall be reasonably
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.1 of the Master Indenture, and shall be
in form and substance reasonably satisfactory to the Indenture Trustee and (ii)
with respect to the Transferor, the Administrator or the Master Servicer, one
or more written opinions of counsel who may be an employee of or counsel to the
Transferor, the Administrator or the Master Servicer, which counsel shall be
reasonably acceptable to the Indenture Trustee and the Eligible Lender Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders thereof
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to the Indenture); and
25
<PAGE> 36
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser;
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Transferor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Indenture Trustee either actually knows
to be so owned or has received written notice thereof shall be do disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Transferor or
any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or Class of Notes or Certificates as applicable, Outstanding at the
date of determination.
"Parity Percentage" means, as of any date of determination,
the fraction expressed as a percentage, the numerator of which is the sum of
(i) the then Pool Balance and (ii) all amounts on deposit in the Collection
Account and the Reserve Account and the denominator of which is the sum of the
aggregate Outstanding Amount of the Notes and the Certificates, accrued and
unpaid interest thereon plus accrued and unpaid Transaction Fees and
Consolidation Loan Fees.
"Parity Percentage Payment" means, with respect to any
Distribution Date, the amount, if any, to be transferred from the Collection
Account to the Note Distribution Account pursuant to Section 5.5(e) of the
Transfer and Servicing Agreement, up to the amount necessary for the Parity
Percentage to equal 102.5% after giving effect to all distributions to be made
on such Distribution Date.
"Participant" means a Securities Depository Participant.
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<PAGE> 37
"Paying Agent" means the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Master Indenture and is authorized by the Issuer to make
the payments to and distributions from the Collection Account and payments of
principal of and interest and any other amounts owing on the Notes on behalf of
the Issuer.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance
Agency.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pledged Account or Fund" means the Collection Account, the
Reserve Account, the Note Distribution Account and the Certificate Distribution
Account.
"PLUS Loan" means a Federal Loan made pursuant to the
provisions of the PLUS program established under Section 428B of the Higher
Education Act (or predecessor provisions).
"Pool Balance" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized), after giving effect to the
following, without duplication: (i) all payments in respect of principal
received by the Trust during such Collection Period from or on behalf of
borrowers and Guarantors and, with respect to certain payments on certain
Financed Student Loans, the Department, (ii) the principal portion of all
Purchase Amounts received by the Trust for such Collection Period and (iii) any
Exchanged Student Loans acquired conveyed to the Trust and any Financed Student
Loans conveyed by the Trust during such Collection Period, in each case
pursuant to Sections 2.2 and 2.3(e).
"PP Loans" means all Stafford Loans and Unsubsidized Stafford
Loans with a first disbursement made by the Transferor on or after July 1,
1996.
"PP Program" means the PNC Bank Preferred Payment Program.
27
<PAGE> 38
"Predecessor Note" means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.7 of the Master Indenture and
in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Primary Servicer" means, with respect to any Financed
Student Loan, the entity responsible for the primary servicing of such Financed
Student Loan on a day to day basis, it being understood that where a
subservicer appointed in accordance with the terms of the Transfer and
Servicing Agreement has responsibility for servicing a Financed Student Loan,
such subservicer and not the Master Servicer shall be the Primary Servicer with
respect such Financed Student Loan.
"Principal Distribution Amount" means, with respect to any
Collection Period, the excess of (A) the sum, without duplication, of the
following amounts: (i) that portion of all collections received by the Master
Servicer or any Servicer on the Financed Student Loans that is allocable to
principal (including the portion of any Guarantee Payments received that is
allocable to principal of the Financed Student Loans); (ii) the portion of the
proceeds allocable to principal from the sale of Financed Student Loans by the
Trust during such Collection Period; (iii) all Realized Losses incurred during
such Collection Period; (iv) to the extent attributable to principal, the
Purchase Amount received with respect to each Financed Student Loan repurchased
by the Transferor or purchased by the Master Servicer under an obligation which
arose during the related Collection Period; and (v) the Adjustment Payments, if
any, received from the Transferor during such Collection Period over (B) the
Issuer Consolidation Payments for such Collection Period; provided, however,
that the Principal Distribution Amount will exclude all payments and proceeds
of any Financed Student Loans the Purchase Amount of which has been included in
Available Funds for a prior Collection Period.
"Principal Factor" means, as of any Distribution Date for
each Class of Notes, a seven-digit decimal figure equal to the Outstanding
Amount of such Class of Notes (after giving effect to any payments of principal
made on such Distribution Date) divided by the original Outstanding Amount of
such Class. The Principal Factor will be 1.0000000 for each Class of Notes as
of the Closing Date; thereafter, the Principal Factor for each Class of Notes
will decline to reflect reductions in the outstanding principal balance of such
Class.
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<PAGE> 39
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Amount" means, as to any Financed Student Loan on
any date of determination, the amount required to prepay in full the
outstanding principal balance of such Financed Student Loan as of the last day
of the most recently completed Collection Period, including all accrued but
unpaid interest thereon (including interest to be capitalized) through the last
day of the Collection Period in which such Financed Student Loan is being
purchased.
"Purchased Student Loan" means a Financed Student Loan
purchased pursuant to Section 4.5 of the Transfer and Servicing Agreement or
repurchased pursuant to Section 3.2 of the Transfer and Servicing Agreement.
"Qualified Letter of Credit" means a letter of credit
delivered or to be delivered to the Indenture Trustee in lieu of a deposit of
cash or Eligible Investments in the Reserve Account for such Class or Series,
which letter of credit shall
(a) be irrevocable and name the Indenture Trustee, in
its capacity as such, as the sole beneficiary thereof;
(b) be issued by a bank whose credit standing is
acceptable to each of the rating agencies which are rating or
have rated the Notes of such Series;
(c) provide that if at any time the then current credit
standing of the issuing bank is such that the continued
reliance on such letter of credit for the purpose or purposes
for which it was originally delivered to the Indenture Trustee
would result in a downgrading of any rating of the Notes of
such Class or Series, the Indenture Trustee may either draw
under such letter of credit any amount up to and including the
entire amount then remaining available for drawing thereunder
or terminate such letter of credit;
(d) be transferable to any successor trustee hereunder
with respect to such Class or Series; and
(e) meet such other standards as may be specified in the
Terms Supplement.
"Qualified Institutional Buyer" has the meaning ascribed to
such term in Rule 144A under the Securities Act.
29
<PAGE> 40
"Quarterly Distribution Date" means, the 25th day of each
January, April, July, and October or if such day is not a Business Day, the
next succeeding Business Day, commencing July 25, 1997.
"Rate Determination Date" means for the LIBOR Rate Notes and
the Certificates, the date which is both two Business Days and two London
Business Days preceding the related Rate Adjustment Date.
"Rating Agency" means Moody's, Standard & Poor's and Fitch.
If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Transferor, notice of which
designation shall be given to the Indenture Trustee, the Eligible Lender
Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Transferor, the Master
Servicer, the Eligible Lender Trustee and the Indenture Trustee in writing that
such action will not result in and of itself in a reduction or withdrawal of
the then current ratings of each Class of Notes.
"Realized Loss" means, for each Financed Student Loan
submitted to a Guarantor for a Guarantee Payment, the excess, if any, of (i)
the unpaid principal balance of such Financed Student Loan on the date it was
first submitted to a Guarantor for a Guarantee Payment over (ii) all amounts
received on or with respect to principal on such Financed Student Loan
(including amounts received pursuant to Sections 3.2 and 4.5 of the Transfer
and Servicing Agreement) up through the earlier to occur of (A) the date a
related Guarantee Payment is made or (B) the last day of the Collection Period
occurring 12 months after the date the claim for such Guarantee Payment is
first denied.
"Record Date" means, with respect to a Distribution Date, the
close of business on the second Business Day preceding such Distribution Date.
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator or the Transferor and (iii) having an established place of
business in London.
30
<PAGE> 41
"Related Financed Student Loan File" has the meaning
specified in Section 3.8(a) of the Transfer and Servicing Agreement.
"Repayment Phase" means the period during which the related
borrower is required to make payments of principal and interest on the related
Financed Student Loan.
"Requisite Amount" means, with respect to any Series for
which a Reserve Account is required to be maintained, an amount specified in or
determined pursuant to the Terms Supplement.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the related Transfer and
Servicing Agreement.
"Reserve Account Initial Deposit" means, $10,300,000.
"Responsible Officer" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
with direct responsibility for the administration of the Indenture and the
other Basic Documents on behalf of the Indenture Trustee, including any
Managing Director, Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary, or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Schedule of Financed Student Loans" means the master listing
of the Financed Student Loans set forth in Schedule A-1 and Schedule A-2 to the
Transfer and Servicing Agreement and Schedule A to each Transfer Agreement, in
each case as from time to time amended or supplemented to reflect the Financed
Student Loans then subject to the Lien of the Indenture. The Schedule of
Financed Student Loans may be in the form of microfiche or in the form of
electronic media.
"Scheduled Principal Balance Table" means the Scheduled
Principal Balance Table set forth on Schedule C to the Transfer and Servicing
Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
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<PAGE> 42
"Securities Depository" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Securities Depository Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository.
"Senior Notes" means the Class A Notes.
"Senior Noteholder" means the holder of a Senior Note.
"Serial Loan" means a Financed Student Loan that is serial to
a student loan owned by a third party.
"Series" means a separate Series of Notes issued pursuant to
the Master Indenture, which Series may, as provided in the Terms Supplement, be
divided into two or more Classes.
"Series 1997-2 Notes" means the Notes designated as the
Issuer's Asset-Backed Notes, Series 1997-2, issued pursuant to the terms of the
Master Indenture and the Terms Supplement and having an original principal
amount equal to $1,030,000,000.
"Servicer" means AFSA, USA Group, PHEAA or, subject to
satisfying the Rating Agency Condition, another entity appointed by the Master
Servicer to service the Financed Student Loans, in its capacity as servicer of
the Financed Student Loans.
"Servicer's Report" means any report of the Master Servicer
delivered pursuant to Section 4.8(a) of the Transfer and Servicing Agreement,
substantially in the form acceptable to the Administrator.
"Servicing Fee" means a quarterly fee in an amount equal to
1.00% of the average Pool Balance as of the last day of each of the three
Collection Periods immediately preceding such Quarterly Distribution Date.
"SLS Loan" means a Federal Loan designated as such that is
made under the Supplemental Loans for Students Program pursuant to the Higher
Education Act.
"Special Allowance Payments" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect
of the Financed Student Loans to the Eligible Lender Trustee on behalf of the
Trust in accordance with the Higher Education Act.
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"Specified Reserve Account Balance" means, with respect to
any Distribution Date, an amount equal to the greater of (i) 1.00% of the sum
of the Outstanding Amount of the Notes and the Certificate Balance on such
Distribution Date, after giving effect to all payments to be made on such date;
or (ii) $1,000,000; provided, however, that such balance shall not exceed the
sum of the aggregate Outstanding Amount of the Notes and the Certificate
Balance.
"Stafford Loan" means a student loan designated as such that
is made under ss. 428 of the Higher Education Act (excluding Unsubsidized
Stafford Loans).
"Standard & Poor's" means Standard & Poor's Rating Services,
a division of The McGraw-Hill Companies, Inc., and its successors and assigns.
"State" means any one of the 50 States of the United States
of America or the District of Columbia.
"Subcustodian" has the meaning specified in Section 3.8 of
the Transfer and Servicing Agreement.
"Subordinated Notes" means the Class B Notes.
"Subordinated Noteholder" means any Noteholder of a
Subordinated Note.
"Subsequent Cut-off Date" means the day as to which principal
and interest accruing with respect to an Exchanged Student Loan are transferred
to the Eligible Lender Trustee on behalf of the Issuer pursuant to Section 2.2
of the Transfer and Servicing Agreement.
"Subservicing Agreement" has the meaning specified in Section
4.13 of the Transfer and Servicing Agreement.
"Successor Administrator" has the meaning specified in
Section 3.7(e) of the Indenture.
"Successor Master Servicer" has the meaning specified in
Section 3.7(e) of the Indenture.
"Swap Agreements" mean the ISDA Master Agreement dated as of
June 20, 1997, between Deutsche Bank AG, New York Branch, and the Issuer; and
the ISDA Master Agreement dated as of June 20, 1997, between Morgan Guaranty
Trust Company of New York and the Issuer, in each case including the schedules
attached thereto and the confirmations issued in connection therewith, and any
33
<PAGE> 44
similar agreement subsequently entered into by the Trust, as each may be
amended, supplemented or otherwise modified from time to time.
"Swap Termination Payments" means termination payments, if
any, owed by the Trust under the Swap Agreements.
"Telerate Page 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Terms Supplement" means, the Second Terms Supplement to the
Indenture dated as of June 25, 1997 between the Issuer and The Indenture
Trustee.
"Transaction Fees" means, collectively, the Servicing Fee,
the Administration Fee, Indenture Trustee Fee and the Eligible Lender Trustee
Fee.
"Transfer Agreement" has the meaning set forth in Section
2.2(b) of the Transfer and Servicing Agreement.
"Transfer and Servicing Agreement" means the Transfer and
Servicing Agreement dated as of June 25, 1997, among the Issuer, the
Transferor, the Administrator, the Eligible Lender Trustee and the Master
Servicer, as amended from time to time.
"Transferor" means PNC Bank, National Association.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any
document or instrument to specific provisions of proposed or temporary
regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Trust" means the Issuer, established pursuant to the Trust
Agreement.
"Trust Account Property" means the Trust Accounts, all
amounts and investments held from time to time in any Trust Account (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Account Initial
Deposit, if any, and all proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section 5.1 of
the Transfer and Servicing Agreement.
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"Trust Agreement" means the Trust Agreement dated as of March
27, 1997 and amended on the Closing Date, between the Depositor and the
Eligible Lender Trustee, as further amended and supplemented from time to time.
"Trust Certificate" means a Certificate.
"Trust Certificateholder" means a person in whose name a
Trust Certificate is registered in the Certificate Register.
"Trust Estate" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to (i) the
property and rights assigned to the Trust pursuant to Article II of the
Transfer and Servicing Agreement and each Transfer Agreement, (ii) the Swap
Agreements, (iii) all funds on deposit from time to time in the Trust Accounts
and (iv) all other property of the Trust from time to time, including any
rights of the Eligible Lender Trustee and the Trust pursuant to the Transfer
and Servicing Agreement, the Administration Agreement and the other Basic
Documents.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trust Swap Payment" means, as to the Swap Agreements with
respect to any Quarterly Distribution Date, the excess, of (i) the aggregate
amount accrued on the Notional Amounts of the Swap Agreements during the three
Interest Periods immediately preceding such Quarterly Distribution Date (or in
the case of the first Distribution Date, since the Closing Date) pursuant to
the Swap Agreements over (ii) the aggregate amount payable under the Swap
Agreements on such Quarterly Distribution Date by each Counterparty to the
Trust.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"Unsubsidized Stafford Loan" means a Federal Loan designated
as such that is made under Section 428H of the Higher Education Act.
"USA Group" means USA Group Loan Services, Inc.
35
<PAGE> 1
EXHIBIT 4.5
TRANSFER AND SERVICING AGREEMENT
among
PNC STUDENT LOAN TRUST I
as Issuer,
PNC BANK, NATIONAL ASSOCIATION
as Transferor, Master Servicer and Administrator
and
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of June 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.1 Conveyance of Initial Financed
Student Loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.2 Conveyance of Exchanged Student Loans . . . . . . . . . . . . . . . .
SECTION 2.3 Conveyance of Certain Financed Student
Loans by the Eligible Lender Trustee
to or upon Order of the Transferor . . . . . . . . . . . . . . . .
SECTION 2.4 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
The Financed Student Loans
SECTION 3.1 Representations and Warranties of
Transferor with Respect to the Financed
Student Loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.2 Repurchase upon Breach;
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.3 Custody of Financed Student Loan
Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.4 Duties of Master Servicer as Custodian . . . . . . . . . . . . . . . .
SECTION 3.5 Instructions; Authority to Act . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 Custodian's Indemnification . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Effective Period and Termination . . . . . . . . . . . . . . . . . . .
SECTION 3.8 Appointment of Subcustodian . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.1 Duties of Master Servicer . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.2 Collection of Financed Student Loan
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.3 Realization upon Financed Student
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.4 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.5 Purchase of Financed Student Loans;
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.6 Servicing Fee; . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.7 Administrator's Certificate . . . . . . . . . . . . . . . . . . . . .
SECTION 4.8 Annual Statement as to Compliance;
Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.9 Annual Independent Certified Public
Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.10 Access to Certain Documentation and
Information Regarding Financed
Student Loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.11 Master Servicer and Administrator
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.12 Appointment of Servicer . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.13 Subservicing Agreements . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.14 Incentive Programs . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1 Establishment of Trust Accounts . . . . . . . . . . . . . . . . . . .
SECTION 5.2 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.3 Application of Collections . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.4 Additional Deposits . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.5 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.6 Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.7 Statements to Certificateholders
and Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.8 Expense Account . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Note Distribution Account and Certificate
Distribution Account . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.10 Monthly Advances . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.11 Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
The Transferor and the Master Servicer
SECTION 6.1 Representations of Transferor and Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.2 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.3 Liability and Indemnities . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.5 Merger or Consolidation of, or Assumption
of the Obligations of, the Transferor, the
Administrator or the Master Servicer . . . . . . . . . . . . . . .
SECTION 6.6 Limitation on Liability of Transferor,
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Master Servicer and Others . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.7 Transferor May Own Certificates or
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.8 Master Servicer Not to Resign . . . . . . . . . . . . . . . . . . . .
ARTICLE VII
The Administrator
SECTION 7.1 Representations of the Administrator . . . . . . . . . . . . . . . . .
SECTION 7.2 Liability and Indemnities . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.3 Administrator Not to Resign . . . . . . . . . . . . . . . . . . . . .
SECTION 7.4 Additional Services . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.5 Amendment to Administration Agreement . . . . . . . . . . . . . . . .
ARTICLE VIII
Default
SECTION 8.1 Master Servicer Default; Administrator
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.3 Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
Termination
SECTION 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
SECTION 11.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.2 Protection of Interests in Trust . . . . . . . . . . . . . . . . . . .
SECTION 11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.5 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . .
SECTION 11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.7 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.10 Assignment to Indenture Trustee . . . . . . . . . . . . . . . . . . .
SECTION 11.11 Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11.12 Limitation of Liability of Eligible
Lender Trustee and Indenture Trustee . . . . . . . . .
APPENDIX A Definitions and Usage
SCHEDULE A-1 Schedule of Financed Student Loans
SCHEDULE A-2 Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loan Files
SCHEDULE C Scheduled Principal Balance Table
EXHIBIT A Form of Report to Noteholders
EXHIBIT B Form of Report to Certificateholders
EXHIBIT C Form of Administrator's Certificate
EXHIBIT D Form of Assignment of Initial Financed
Student Loans
EXHIBIT E Transfer Agreement
</TABLE>
iv
<PAGE> 6
TRANSFER AND SERVICING AGREEMENT (the "Agreement") dated as of June
25, 1997, among PNC STUDENT LOAN TRUST I, a Delaware business trust (the
"Issuer"), PNC Bank, National Association, a national banking association (the
"Transferor," the "Master Servicer" or the "Administrator" in such respective
capacities) and, THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, solely as eligible lender trustee and not in its individual
capacity (the "Eligible Lender Trustee").
WHEREAS the Issuer desires to acquire student loans originated or
acquired by the Transferor in the ordinary course of business;
WHEREAS the Eligible Lender Trustee is willing to hold legal title
to, and serve as eligible lender trustee with respect to, such student loans on
behalf of the Issuer; and
WHEREAS the Master Servicer and the Administrator are willing to
service such student loans and undertake certain administrative functions with
respect thereto; and
WHEREAS the Issuer is authorizing on the date hereof for issuance its
Series 1997-2 Notes; and
WHEREAS the parties hereto are entering into this Transfer and
Servicing Agreement in connection with such Series 1997-2 Notes.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree, intending to be legally
bound hereby, as follows:
ARTICLE I
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix
A hereto, which also contains rules as to usage and construction that shall be
applicable herein.
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.1. Conveyance of Initial Financed Student Loans. (a) In
consideration of the Issuer's delivery to or upon the order of the Transferor
on the Closing Date of
<PAGE> 7
$1,026,910,000, the Transferor agrees to, and the Transferor does hereby, as
evidenced by a duly executed written assignment in the form of Exhibit D,
contribute, transfer, assign, set over and otherwise convey to the Eligible
Lender Trustee on behalf of the Issuer, without recourse (subject to the
obligations herein):
(i) all right, title and interest in and to the Financed
Student Loans listed on Schedule A-1 and Schedule A-2 to this Agreement (the
"Initial Financed Student Loans") and all obligations of the Obligors
thereunder, including all moneys paid thereunder(other than Interest Subsidy
Payments and Special Allowance Payments payable through the applicable
Cut-off Date), and all written communications received by the Transferor with
respect thereto and still retained by Transferor in accordance with its
retention policies (including borrower correspondence, notices of death,
disability or bankruptcy and requests for deferrals or forbearance), after
the applicable Cut-off Date;
(ii) all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all investments and proceeds
thereof (including all income thereon); and
(iii) the proceeds of any and all of the foregoing.
(b) On the Closing Date, the Transferor shall have delivered (A)
to the Rating Agencies an Opinion of Counsel with respect to the transfer of the
Initial Financed Student Loans and (B) to the Eligible Lender Trustee and the
Indenture Trustee the Opinion of Counsel required by Section 11.2(i)(1).
SECTION 2.2. Conveyance of Exchanged Student Loans. (a) Subject to
the conditions set forth in paragraph (b) below, in consideration of the
Eligible Lender Trustee's conveyance of Financed Student Loans on the related
Exchange Date to the Transferor pursuant to Section 2.3(a), if the Transferor
exercises its option pursuant to Section 2.3(d), the Transferor shall
contribute, transfer, assign, set over and otherwise convey to the Eligible
Lender Trustee on behalf of the Issuer, without recourse (subject to the
obligations herein), all right, title and interest in and to each Exchanged
Student Loan, and all obligations of the Obligors thereunder, including all
moneys paid thereunder (other than Interest Subsidy Payments and Special
Allowance Payments payable through the related Subsequent Cut-off Date), and
all written communications received by the Transferor with respect thereto and
still retained by the Transferor in accordance with its retention policies
(including borrower correspondence, notices of death,
2
<PAGE> 8
disability or bankruptcy and requests for deferrals or forbearances), on and
after the related Subsequent Cut-off Date, and the proceeds of any and all of
the foregoing.
(b) The Transferor shall transfer to the Issuer the Exchanged Student
Loans for a given Exchange Date and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to such Exchange Date:
(i) the Transferor shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee a duly executed written assignment
(including an acceptance by the Eligible Lender Trustee and the Indenture
Trustee) in substantially the form of Exhibit E (each, a "Transfer
Agreement"), which shall include supplements to Schedules A-1 and A-2, listing
such Exchanged Student Loans;
(ii) the Transferor shall have delivered, at least two days'
prior to such Exchange Date, notice of such transfer to the Eligible Lender
Trustee and the Indenture Trustee, with a copy to the Rating Agencies,
including a listing of the aggregate principal balance of such Exchanged
Student Loans;
(iii) the Transferor shall, to the extent required by Section
2.3(d), have deposited in the Collection Account all collections received in
respect of the Exchanged Student Loans on and after each applicable Subsequent
Cut-off Date and all required Adjustment Payments;
(iv) as of such Exchange Date, the Transferor was not insolvent
nor will it have been made insolvent by such exchange nor is it aware of any
pending insolvency;
(v) such exchange will not result in a material adverse Federal
or state tax consequence to the Issuer relating to its tax classification or
the Noteholders, considered as a whole, relating to a change in the
characterization of the Notes;
(vi) no Event of Default shall have occurred and be continuing as
of such Exchange Date and no Master Servicer Default or Administrator Default
shall have occurred and be continuing as of such Exchange Date;
(vii) the Exchange Period shall not have terminated;
(viii) the Transferor shall have delivered to the Indenture Trustee
and the Eligible Lender Trustee an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph (b);
3
<PAGE> 9
((ix) the Transferor shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the Trust
Estate and the first perfected security interest of the Indenture Trustee in
the Financed Student Loans; and
(x) no selection procedures believed by the Transferor to be
adverse to the interests of the Certificateholders or the Noteholders shall
have been utilized in selecting the Exchanged Student Loans;
provided, however, that the Transferor shall not incur any liability as a
result of transferring Exchanged Student Loans on any Exchange Date at a time
when the condition set forth in clause (v) was not satisfied, if at the time of
such transfer the Transferor was not aware of any fact that would reasonably
suggest that such condition would not be satisfied as of such date.
Upon the satisfaction of the conditions set forth in this Section
2.2(b), the Eligible Lender Trustee shall execute and deliver to the Transferor
an Assignment, substantially in the form of Annex B to the Transfer Agreement.
SECTION 2.3. Conveyance of Certain Financed Student Loans by the
Eligible Lender Trustee to or upon Order of the Transferor. (a) Upon receipt
of written notice (or telephonic or facsimile notice promptly followed by
written notice) from the Transferor (or from the Master Servicer on behalf of
the Transferor) by the Eligible Lender Trustee and the Indenture Trustee, the
Eligible Lender Trustee will convey to the Transferor the Financed Student
Loans identified in such notice, which are to be repaid with proceeds of the
Consolidation Loans to be made by or on behalf of the Transferor.
Simultaneously with each such conveyance by the Eligible Lender Trustee and the
making by the Transferor of each such Consolidation Loan, the Transferor shall
deposit into the Collection Account an amount equal to the aggregate Purchase
Amount of such Financed Student Loans, as payment for such conveyance.
(b) Upon receipt of written notice (or telephonic or facsimile
notice promptly followed by written notice) from the Transferor (or from the
Master Servicer on behalf of the Transferor) by the Eligible Lender Trustee and
the Indenture Trustee, that a Financed Student Loan that is a Serial Loan is to
be conveyed to the holder of one or more student loans to which such Financed
Student Loan is serial, the Eligible Lender Trustee shall convey to the order
of the Transferor or the Transferor's designee the Financed Student Loan(s)
identified in such notice. Simultaneously with each such conveyance by the
4
<PAGE> 10
Eligible Lender Trustee, the Transferor shall deposit, or cause the transferee
of such Financed Student Loan(s) to deposit, into the Collection Account an
amount equal to the aggregate Purchase Amount of such Financed Student Loan(s)
in consideration for such conveyance.
(c) Upon receipt of written notice (or telephonic or facsimile notice
followed by written notice) from the Master Servicer by the Eligible Lender
Trustee and the Indenture Trustee, the Eligible Lender Trustee will convey to
the Master Servicer the Financed Student Loans identified in such notice, which
are to be transferred to a Guarantor in consideration of a related Guarantee
Payment. Within one Business Day of its receipt of the related Guarantee
Payment, the Master Servicer shall deposit, or cause to be deposited, into the
Collection Account an amount equal to such Guarantee Payment, as payment of such
conveyance.
(d) (i) Notwithstanding anything else contained in this Section 2.3
to the contrary, during the Exchange Period, subject to the conditions set forth
in Section 2.2(b), in lieu of depositing into the Collection Account the
Purchase Amount of a Financed Student Loan pursuant to Section 2.3(a), the
Transferor may, at its option, transfer to the Eligible Lender Trustee on behalf
of the Trust, as an Exchanged Student Loan, the Consolidation Loan being made by
the Transferor relating to the Financed Student Loan for which it is being
exchanged. Any Financed Student Loan being so transferred to the Transferor
shall be deemed transferred prior to the origination of the related
Consolidation Loan.
(ii) Additionally, during the Exchange Period, subject to the
conditions set forth in Section 2.2(b), in lieu of depositing into the
Collection Account the Purchase Amount of a Financed Student Loan pursuant to
Section 2.3(b) or as otherwise permitted by this Section 2.3(d)(ii), the
Transferor may, at its option, transfer to the Eligible Lender Trustee on behalf
of the Trust, as an Exchanged Student Loan, one or more Federal Loans owned by
the Transferor that are serial to an existing Financed Student Loan owned by the
Trust; provided that each such Exchanged Student Loan satisfies the following
criteria: (A) the Exchanged Student Loan was originated under the same loan
program as the Financed Student Loan for which it is being exchanged and
entitles the holder thereof to receive interest based on the same interest rate
index as the Financed Student Loan for which it is being exchanged, (B) the
Exchanged Student Loan will not, at any level of such interest rate index, have
an interest rate that is less than the Financed Student Loan for which it is
being exchanged and (C) the average principal balance per Obligor of the
Exchanged Student Loans that are Serial Loans being transferred into the Trust
on each Exchange Date and the existing Financed Student Loans to which
5
<PAGE> 11
they are serial is within 10% (plus or minus) of the average principal balance
per Obligor of the Financed Student Loans being transferred to the Transferor on
such Exchange Date and the existing Federal Loans owned by the Transferor to
which they are serial, if any.
(e) If on any Exchange Date the aggregate outstanding principal
balance as of the related Subsequent Cut-off Date of all the Exchanged Student
Loans being exchanged on such Exchange Date is less than that of all the
Financed Student Loans for which they are being exchanged plus any Issuer
Consolidation Payments being made on such Exchange Date, an amount equal to such
difference (the "Adjustment Payments") shall be deposited by the Transferor into
the Collection Account on the related Exchange Date.
(f) If on any Exchange Date the aggregate outstanding principal
balance as of the related Subsequent Cut-off Date of all the Exchanged Student
Loans that are Consolidation Loans being exchanged on such Exchange Date is
greater than that of all the Financed Student Loans for which they are being
exchanged, upon written request of the Transferor an amount up to the amount of
such excess (the "Issuer Consolidation Payments") shall be remitted by the
Indenture Trustee to the Transferor from Consolidation Prepayments on deposit in
the Collection Account.
SECTION 2.4. Security Agreement. Although it is the intent of the
parties to this Agreement that the conveyance of the Transferor's right, title
and interest in and to the Financed Student Loans pursuant to this Agreement or
any Transfer Agreement shall constitute a contribution and transfer and not a
loan, in the event that such conveyance is deemed to be a loan, it is the
intent of the parties to this Agreement that the Transferor shall be deemed to
have granted to the Eligible Lender Trustee, on behalf of the Issuer, a first
priority perfected security interest in all of the Transferor's right, title
and interest in, to and under the Financed Student Loans and the proceeds
thereof, and that this Agreement shall constitute a security agreement under
applicable law.
ARTICLE III
The Financed Student Loans
SECTION 3.1. Representations and Warranties of Transferor with
Respect to the Financed Student Loans. The Transferor hereby makes the
following representations and warranties as to the Financed Student Loans on
which the Issuer is deemed to have relied in acquiring (through the Eligible
6
<PAGE> 12
Lender Trustee) such Financed Student Loans. Such representations and
warranties speak as of the Closing Date, in the case of the Initial Financed
Student Loans, and as of the applicable Exchange Dates in the case of the
Exchanged Student Loans, but shall survive the contribution, transfer and
assignment of such Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture.
(i) Characteristics of Financed Student Loans. Each
Financed Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its jurisdiction to an
eligible borrower under applicable law and agreements and was fully and
properly executed by the parties thereto, (B) was originated or acquired by
the Transferor in the ordinary course of its business, and (C) provides or,
when the payment schedule with respect thereto is determined, will provide
for payments on a periodic basis that fully amortize the principal amount of
such Financed Student Loan by its maturity and yields interest at the rate
applicable thereto (except as otherwise provided in Section 4.14), as such
maturity may be modified in accordance with any applicable deferral or
forbearance periods granted in accordance with applicable laws and
restrictions, including those of the Higher Education Act or any Guarantee
Agreement. Each Financed Student Loan that is a Stafford Loan qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments from the Department. Each Financed Student Loan that is a
Consolidation Loan qualifies the holder thereof to receive Interest Subsidy
Payments and Special Allowance Payments from the Department to the extent
applicable. Each Financed Student Loan that is a PLUS Loan, a SLS Loan or an
Unsubsidized Stafford Loan qualifies the holder thereof to receive Special
Allowance Payments from the Department to the extent applicable. Each
Financed Student Loan qualifies the holder thereof to receive Guarantee
Payments from the applicable Guarantor in accordance with the applicable
Guarantee Agreement.
(ii) Schedule of Financed Student Loans. The information
concerning the Financed Student Loans set forth in Schedule A-1 and Schedule
A-2 to this Agreement and Schedule A of the related Transfer Agreement is
true and correct in all material respects as of the close of business on its
applicable Cut-off Date (with respect to Schedule A-1 and Schedule A-2 to
this Agreement) or each applicable Subsequent Cut-off Date (with respect
thereto), as applicable, and no selection procedures believed to be
7
<PAGE> 13
adverse to the Noteholders or the Certificateholders were utilized in
selecting the Financed Student Loans. The computer tape or electronic data
transmission regarding the Initial Financed Student Loans is true and correct
in all material respects as of the applicable Cut-off Date and each computer
tape or electronic data transmission regarding the Subsequent Student Loans
will be true and correct in all material respects as of the related Subsequent
Cut-off Date.
(iii) Compliance with Law. Each Financed Student Loan complied
at the time it was originated or made and at the execution of this Agreement
or the applicable Transfer Agreement, as the case may be, complies, and the
Transferor and its agents, with respect to each such Financed Student Loan,
have at all times complied, in all material respects with all requirements of
applicable Federal, State and local laws and regulations thereunder,
including the Higher Education Act, the Equal Credit Opportunity Act, the
Federal Reserve Board's Regulation B and other applicable consumer credit
laws and equal credit opportunity laws.
(iv) Binding Obligation. Each Financed Student Loan represents
the genuine, legal, valid and binding payment obligation in writing of the
related borrower, enforceable by or on behalf of the holder thereof against
such borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and similar laws relating
to creditors' rights generally and subject to general principles of equity
and no Financed Student Loan has been satisfied, subordinated or rescinded.
(v) No Defenses. No right of rescission, setoff,
counterclaim or defense has been asserted or, to the Transferor's knowledge,
threatened with respect to any Financed Student Loan.
(vi) No Default. No Initial Financed Student Loan has a payment
that is more than 90 days overdue as of the applicable Cut-off Date, and no
Exchanged Student Loan will have a payment that is more than 90 days overdue
as of its related Subsequent Cut-off Date, and, except as permitted in this
paragraph, no default, breach, violation or event permitting acceleration
under the terms of any
8
<PAGE> 14
Financed Student Loan has occurred; and, except for payment defaults
continuing for a period of not more than 90 days, no continuing condition that
with notice or the lapse of time or both would constitute a default, breach,
violation or event permitting acceleration under the terms of any Financed
Student Loan has arisen; and the Transferor has not waived and shall not waive
any of the foregoing other than as permitted by the Basic Documents.
(vii) Title. It is the intention of the Transferor that the
transfer and assignment herein contemplated constitutes a contribution of the
Financed Student Loans from the Transferor to the Eligible Lender Trustee on
behalf of the Issuer and the beneficial interest in and title to such Financed
Student Loans shall not be part of the debtor's estate in the event of the
appointment of a receiver with respect to the Transferor. No Financed Student
Loan has been transferred, assigned or pledged by the Transferor to any Person
other than the Eligible Lender Trustee on behalf of the Issuer or any such
assignment or pledge has been released. Immediately prior to the transfer and
assignment herein contemplated, the Transferor had good title to each Financed
Student Loan, free and clear of all Liens and, immediately upon the transfer
thereof, the Eligible Lender Trustee on behalf of the Issuer shall have good
title to each such Financed Student Loan, free and clear of all Liens, and the
transfer to the Indenture Trustee, shall have been perfected under the UCC. No
Financed Student Loan was subject to a third party's right of first refusal
except as provided in the Subservicing Agreement with PHEAA and the
Subservicing Agreement with USA Group (which rights of first refusal have been
waived) and the transfer of the Financed Student Loans as contemplated hereby
will not violate in any material respect the terms of any Subservicing
Agreement or any other material agreement or arrangement to which the Master
Servicer is a party.
(viii) Lawful Assignment. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under which the
contribution, transfer and assignment of such Financed Student Loan under
this Agreement or any Transfer Agreement is unlawful, void or voidable.
(ix) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first perfected security
interest in the Financed Student Loans (if, despite the express intention of
the parties hereto, the transfer of the Financed Student Loans is deemed a
loan), and to give the Indenture Trustee a first perfected security interest
therein, shall have been made or have been delivered for filing.
9
<PAGE> 15
(x) One Original. There is only one original executed copy of
each promissory note evidencing a Financed Student Loan.
(xi) Principal Balance. The aggregate principal balance of the
Initial Financed Student Loans set forth on Schedule A-1 and Schedule A-2 as
of each applicable Cut-off Date is $982,839,748.00 and $17,601,668.94
respectively. Additionally, as of each applicable Cut- off Date, the accrued
interest on the Initial Financed Student Loans set forth on Schedule A-1 and
Schedule A-2 other than with respect to Interest Subsidy Payments and Special
Allowance Payments is $13,368,304.00 and $422,169.65 respectively.
(xii) [Reserved]
(xiii) Interest Accruing. Each Financed Student Loan is accruing
interest (whether or not such interest is being paid currently, by the
Obligor or by the Department, or is being capitalized), except as otherwise
expressly permitted by the Basic Documents.
SECTION 3.2. Repurchase upon Breach; Reimbursement. The Transferor,
the Master Servicer or the Eligible Lender Trustee, as the case may be, shall
inform the other parties to this Agreement and the Indenture Trustee promptly,
in writing, upon the discovery of any breach of the representations and
warranties made pursuant to Section 3.1. Unless any such breach shall have
been cured within 90 days following the discovery thereof by the Transferor or
receipt by the Transferor of written notice from the Eligible Lender Trustee or
the Master Servicer of such breach, the Financed Student Loan in which the
interests of the Noteholders or the Certificateholders are materially and
adversely affected by any such breach shall be retransferred, reassigned,
resetover and otherwise reconveyed to the Transferor (a "repurchase") as of the
first day succeeding the end of such 90-day period that is the last day of a
Collection Period; provided that it is understood that any such breach that
does not adversely affect any Guarantor's obligation to guarantee payment of
such Financed Student Loan to the Eligible Lender Trustee will not be
considered to have a material adverse effect for this purpose. In
consideration of and simultaneously with the repurchase of the Financed Student
Loan, the Transferor shall remit the Purchase Amount, in the manner specified
in Section 5.4, and the Issuer shall execute such assignments and other
documents reasonably requested by the Transferor in order to effect such
transfer. Upon any such transfer of a Financed Student Loan, legal title to,
and beneficial ownership and control of, the related Financed Student Loan File
will thereafter belong to the Transferor. In
10
<PAGE> 16
addition, if any such breach does not trigger such a repurchase obligation but
does result in the refusal by a Guarantor to guarantee the applicable portion of
the accrued interest, or the loss of (including any obligation of the Issuer to
repay to the Department) certain Interest Subsidy Payments and Special Allowance
Payments, with respect to a Financed Student Loan, then, unless such breach, if
curable, is cured within 90 days following the discovery thereof by the
Transferor or receipt by the Transferor of written notice from the Eligible
Lender Trustee, the Transferor shall, at its option, either repurchase such
Financed Student Loan at the applicable Purchase Amount or reimburse the Issuer
by remitting an amount equal to the sum of all amounts that would have been
payable if not for such breach in the manner specified in Section 5.4 not later
than the last day of the Collection Period in which such 90th day occurs. The
sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders with respect to a breach of
representations and warranties pursuant to Section 3.1 and the agreement
contained in this Section 3.2 shall be to require the Transferor to repurchase
Financed Student Loans or to reimburse the Issuer as provided above pursuant to
this Section 3.2, subject to the conditions contained herein. The Eligible
Lender Trustee shall have no duty to conduct any affirmative investigation as to
the occurrence of any condition requiring the repurchase of any Financed Student
Loan or the reimbursement for any interest penalty pursuant to this Section 3.2.
SECTION 3.3. Custody of Financed Student Loan Files. To assure
uniform quality in servicing the Financed Student Loans and to reduce
administrative costs, the Issuer hereby revocably appoints the Master Servicer
as custodian of the following documents or instruments with respect to each
Financed Student Loan (such documents are referred to collectively as the
"Financed Student Loan File":
(a) the original fully executed copy of the note evidencing the
Financed Student Loan (which may be included in the application) unless such
note is in the custody of a Guarantor;
(b) the original loan application fully executed by the related
borrower (which may be included in the note evidencing a Financed Student
Loan); and
(c) any and all other documents and computerized records that any of
the Master Servicer, the Administrator or the Transferor shall keep on file, in
accordance with its customary procedures, relating to such Financed Student
Loan or any Obligor with respect thereto.
11
<PAGE> 17
Notwithstanding the foregoing, each Subcustodian appointed pursuant
to Section 3.8 who enters into a Subservicing Agreement may act as a custodian
of the Related Financed Student Loan Files.
SECTION 3.4. Duties of Master Servicer as Custodian. (a)
Safekeeping. The Master Servicer, as custodian, shall hold or cause one or
more Subcustodians appointed pursuant to Section 3.8, to (i) hold the Financed
Student Loan Files for the benefit of the Issuer, and (ii) maintain such
accurate and complete accounts, records and computer systems pertaining to each
Financed Student Loan File as shall enable the Issuer to comply with this
Agreement and the other Basic Documents. In performing its duties as
custodian, the Master Servicer shall act with reasonable care and shall ensure
that it complies in all material respects with all applicable Federal and State
laws, including the Higher Education Act, with respect thereto. The Master
Servicer shall conduct, or cause to be conducted, periodic audits of the
Financed Student Loan Files held by it under this Agreement and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the Master Servicer's
record keeping. The Master Servicer shall promptly report to the Issuer and
the Indenture Trustee any failure on its part to hold the Financed Student Loan
Files and maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer, the Eligible Lender Trustee or the Indenture Trustee of the Financed
Student Loan Files.
(b) Maintenance of and Access to Records. The Master Servicer shall
cause each Subcustodian to maintain the Related Financed Student Loan Files at
the office specified opposite such Subcustodian's name in Schedule B or shall
cause the Financed Student Loan Files to be maintained at such other offices as
shall be specified by written notice to the Issuer and the Indenture Trustee
not later than 60 days after any change in location. Upon reasonable prior
notice, the Master Servicer shall make available, or cause each Subcustodian to
make available, to the Issuer and the Indenture Trustee or their respective
duly authorized representatives, attorneys or auditors (i) a list of locations
of the Financed Student Loan Files and (ii) the related accounts, records and
computer systems at the locations identified in the list provided pursuant to
clause (i) of this Section 3.4(b) and at such times which are in accordance
with the applicable Subservicing Agreements.
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SECTION 3.5. Instructions; Authority to Act. The Master Servicer
shall be deemed to have received proper instructions with respect to the
Financed Student Loan Files upon its receipt of written instructions signed by
a Responsible Officer of the Indenture Trustee.
SECTION 3.6. Custodian's Indemnification. (a) The Master Servicer
shall pay from its own funds for any loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Issuer, the Eligible Lender Trustee or the Indenture Trustee or any
of their officers, directors, employees and agents to the extent such loss,
liability or expense results from the Master Servicer's failure to perform its
duties as specified in this Article III where the final determination that any
such improper act or omission by the Master Servicer or any Subcustodian
resulted in such loss, liability or expense is established by a court of law,
by an arbitrator or by way of settlement agreed to by the Master Servicer;
provided, however, that the Master Servicer shall not be liable to the Eligible
Lender Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Eligible Lender Trustee and the
Master Servicer shall not be liable to the Indenture Trustee for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Indenture Trustee. This provision shall not be construed to limit the
Master Servicer's or any other party's rights, obligations, liabilities, claims
or defenses which arise as a matter of law or pursuant to any other provision
of this Agreement; provided, however, the Master Servicer shall not be liable
for any such costs, expenses, losses, claims, damages and liabilities imposed
upon such Person to the extent that they arise out of or result from such
Person's negligence, willful malfeasance or bad faith or a breach of the
representations and warranties of such Person in this Agreement.
Notwithstanding anything to the contrary contained in this Article III, in no
event shall the Master Servicer be liable under any theory of tort, contract,
strict liability or other legal or equitable theory for any lost profits or
exemplary, punitive, special, incidental, indirect or consequential damages,
each of which is hereby excluded by agreement of the parties regardless of
whether or not the Master Servicer has been advised of the possibility of such
damages.
(b) Promptly after receipt by an indemnified party under this
Section 3.6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 3.6, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party
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will not relieve it from any liability which it may have to any indemnified
party otherwise than under Section 3.6, except to the extent the indemnifying
party is materially prejudiced by such failure. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party or parties shall
have the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of the indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 3.6 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. In no event shall the indemnifying party be liable for fees and
expenses for more than one counsel separate from their own counsel for all
indemnified parties in connection with any one action or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
An indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
The indemnified party will not, without the prior written consent of
the indemnifying party, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in which indemnification may be sought hereunder.
SECTION 3.7. Effective Period and Termination. The Master
Servicer's appointment as custodian of the Financed Student Loans being
conveyed hereunder shall become effective as
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of the Closing Date and shall continue in full force and effect for so long as
the Master Servicer shall remain the Master Servicer hereunder. If the Master
Servicer or any successor Master Servicer shall resign as Master Servicer in
accordance with the provisions of this Agreement or if all the rights and
obligations of the Master Servicer or any such successor Master Servicer shall
have been terminated under Section 8.1 of this Agreement, the appointment of the
Master Servicer or such successor Master Servicer as custodian shall be
terminated simultaneously with the effectiveness of such termination. As soon
as practicable on or after any termination of such appointment (and in any event
within (i) 10 Business Days, with respect to that portion of the Financed
Student Loan Files consisting of electronic records and information, and (ii) 30
Business Days, with respect to the remaining portion of the Financed Student
Loan Files), the Master Servicer shall deliver, to the extent in its possession,
the Financed Student Loan Files to the Indenture Trustee or the Indenture
Trustee's agent at such place or places as the Indenture Trustee may reasonably
designate.
SECTION 3.8. Appointment of Subcustodian. (a) The Master Servicer
may at any time appoint one or more Servicers to act as a subcustodian (each a
"Subcustodian") of the Financed Student Loan Files of the Financed Student
Loans being serviced by such Servicer (the "Related Financed Student Loan
Files") to perform all or any portion of its obligations as custodian
hereunder; provided, however, that the Master Servicer shall remain obligated
and be liable to the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders and the Noteholders for the custodial services
with respect to the Financed Student Loan Files in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of such Subcustodian and to the same extent and under the
same terms and conditions as if the Master Servicer alone were performing the
custodial services. The fees and expenses of the Subcustodian shall be as
agreed between the Master Servicer and its Subcustodian from time to time and
none of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders shall have any responsibility therefor.
(b) The appointment of a Subcustodian by the Master Servicer shall become
effective as of the date specified in the related Subservicing Agreement and
shall continue in full force and effect with respect to each such Subcustodian
and its Related Financed Student Loan Files for so long as such Subcustodian is
a Servicer of the Financed Student Loans relating to such Financed Student Loan
Files. As soon as practicable following the occurrence of an event of default
as
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to which the Master Servicer is aware or has received notice of that is
continuing under a Subservicing Agreement, the Master Servicer shall cause each
applicable Subcustodian to deliver the Financed Student Loan Files held by it
as directed by the Master Servicer.
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.1. Duties of Master Servicer. The Master Servicer, for
the benefit of the Issuer (to the extent provided herein), shall manage,
service, administer and make collections on the Financed Student Loans with
reasonable care. Without limiting the generality of the foregoing or of any
other provision set forth in this Agreement and notwithstanding any other
provision to the contrary set forth herein, the Master Servicer shall manage,
service, administer and make collections with respect to the Financed Student
Loans (other than collection of any Interest Subsidy Payments and Special
Allowance Payments, which the Eligible Lender Trustee will perform on behalf of
the Trust) in accordance in all material respects with all applicable Federal
and State laws, including all applicable standards, guidelines and requirements
of the Higher Education Act and any Guarantee Agreement, the failure to comply
with which would adversely affect the eligibility of one or more of the
Financed Student Loans for Interest Subsidy Payments, Special Allowance
Payments or Guarantee Payments or would have a material adverse effect on the
Certificateholders or the Noteholders.
The Master Servicer's duties shall include collection and posting of
all payments, responding to inquiries of borrowers on such Financed Student
Loans, monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending bills or payment coupons to borrowers and
otherwise establishing repayment terms, reporting tax information to borrowers,
if applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the
provisions of Section 4.2, the Master Servicer shall follow customary
standards, policies and procedures in performing its duties as Master Servicer.
Without limiting the generality of the foregoing, the Master Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders or any of them, instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Financed Student Loans;
provided, however, that
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the Master Servicer agrees that it will not (a) permit any rescission or
cancellation of a Financed Student Loan except as ordered by a court of
competent jurisdiction or governmental authority or as otherwise consented to in
writing by the Eligible Lender Trustee and the Indenture Trustee or (b) except
as otherwise provide in Section 4.14, reschedule, revise, defer or otherwise
compromise with respect to payments due on any Financed Student Loan except
pursuant to any applicable deferral or forbearance periods or otherwise in
accordance with all applicable standards, guidelines and requirements with
respect to the servicing of the Financed Student Loans (notwithstanding the
foregoing, the Master Servicer may, in its sole discretion, without having to
obtain the consent or approval of any other party, waive amounts owing under a
Financed Student Loan up to and including $50.00); provided further, however,
that the Master Servicer shall not agree to any decrease of the interest rate
on, or the principal amount payable with respect to, any Financed Student Loan
except as otherwise permitted in accordance with applicable standards,
guidelines and requirements of the Higher Education Act, any Guarantee
Agreement. The Master Servicer also shall be responsible for advising the
Eligible Lender Trustee and the Indenture Trustee of any action required to be
taken to maintain each such Guarantee Agreement. The Eligible Lender Trustee on
behalf of the Issuer hereby grants a power of attorney and all necessary
authorization to the Master Servicer to sign endorsements of the notes relating
to the Financed Student Loans on behalf of the Eligible Lender Trustee in
connection with conveyances pursuant to Section 2.3 hereof and to maintain any
and all collection procedures with respect to the Financed Student Loans,
including filing, pursuing and recovering claims against the Guarantors for
Guarantee Payments and taking any steps to enforce such Financed Student Loan
such as commencing a legal proceeding to enforce a Financed Student Loan in the
name of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders. The Eligible Lender Trustee or the
Indenture Trustee shall upon the written request of the Master Servicer or the
Administrator furnish the Master Servicer or the Administrator with any other
powers of attorney and other documents reasonably necessary or appropriate to
enable the Master Servicer or the Administrator to carry out its servicing and
administrative duties hereunder.
SECTION 4.2. Collection of Financed Student Loan Payments. (a) The
Master Servicer shall make reasonable efforts (including all efforts that may
be specified under the Higher Education Act or any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Financed
Student Loans as and when the same shall become due. The Master Servicer may
in its discretion waive any late payment
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charge or any other fees in addition to any fee or waiver permitted under
Section 4.1 that may be collected in the ordinary course of servicing a Financed
Student Loan.
(b) The Master Servicer shall make reasonable efforts to claim,
pursue and collect all Guarantee Payments from the Guarantors pursuant to the
Guarantee Agreements with respect to any of the Financed Student Loans as and
when the same shall become due and payable, shall comply in all material
respects with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments. In connection therewith, the Master
Servicer is hereby authorized and empowered to convey to any Guarantor the note
and the related Financed Student Loan File representing any Financed Student
Loan in connection with submitting a claim to such Guarantor for a Guarantee
Payment in accordance with the terms of the applicable Guarantee Agreement
whereupon the Lien of the Indenture Trustee relating to such Financed Student
Loan shall be released without any further action of any kind.
(c) The Eligible Lender Trustee shall, with the assistance of the
Master Servicer and on behalf of the Issuer, make reasonable efforts to claim,
pursue and collect all Interest Subsidy Payments and Special Allowance Payments
from the Department with respect to any of the Financed Student Loans as and
when the same shall become due and payable, shall comply in all material
respects with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments. All amounts so collected by the
Eligible Lender Trustee shall constitute Available Funds for the applicable
Collection Period or Collection Periods and shall be deposited into the
Collection Account in accordance with Section 5.4. In connection therewith,
the Master Servicer shall prepare and file with the Department on a timely
basis all claims, forms and other documents and filings necessary or
appropriate in connection with the claiming of Interest Subsidy Payments and
Special Allowance Payments on behalf of the Eligible Lender Trustee and shall
otherwise assist the Eligible Lender Trustee in pursuing and collecting such
Interest Subsidy Payments and Special Allowance Payments from the Department.
The Eligible Lender Trustee shall, upon the written request of the Master
Servicer, furnish the Master Servicer with any power of attorney and other
documents reasonably necessary or appropriate to enable the Master Servicer to
prepare and file such claims, forms and other documents and filings.
(d) The Eligible Lender Trustee may permit trusts, other than
the Trust, established by the Transferor to securitize student loans to use the
Department lender identification number applicable to the Trust. In such
event,
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the Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
consolidation fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the Master Servicer and paid to such other trust from any collections made by
them which would otherwise have been payable to the Collection Account for the
Trust. If so specified in the servicing agreement applicable to any such other
trust, any amounts assessed against payments due from the Department or any
Guarantor to the Trust as a result of amounts owing to the Department or any
Guarantor to the Trust from such other trust using such common lender
identification number will be deemed to have been assessed against such other
trust and will be deducted by the Eligible Lender Trustee or the Master Servicer
from any collections made by them which would otherwise be payable to the
collection account for such other trust and paid to the Trust.
SECTION 4.3. Realization upon Financed Student Loans. For the
benefit of the Issuer, the Master Servicer shall use reasonable efforts
consistent with customary servicing practices and procedures and including all
efforts that may be specified under the Higher Education Act or any Guarantee
Agreement in its servicing of any delinquent Financed Student Loans.
SECTION 4.4. No Impairment. The Master Servicer shall not impair in
any material respect the rights of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders in the Financed
Student Loans or in any Guaranty Agreement.
SECTION 4.5. Purchase of Financed Student Loans; Reimbursement. The
Master Servicer or the Eligible Lender Trustee, as the case maybe, shall inform
the other parties to this Agreement and the Indenture Trustee promptly, in
writing, upon the discovery of any breach of an obligation under Section 4.1,
4.2, 4.3 or 4.4 hereof. Unless any such breach shall have been cured within 90
days following the discovery thereof by the
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Master Servicer or receipt by the Master Servicer of written notice from the
Eligible Lender Trustee or the Master Servicer of such breach (or, at the Master
Servicer's election, the last day of the first month following such discovery or
notice), the Master Servicer shall purchase any Financed Student Loan in which
the interests of the Noteholders and the Certificateholders are materially and
adversely affected by such breach as of the first day succeeding the end of such
90-day period that is the last day of a Collection Period; provided that it is
understood that any such breach that does not adversely affect any Guarantor's
obligation to guarantee payment of such Financed Student Loan to the Eligible
Lender Trustee will not be considered to have a material adverse effect for this
purpose. In consideration of and simultaneously with the purchase of any such
Financed Student Loan pursuant to either of the two preceding sentences, the
Master Servicer shall remit the Purchase Amount in the manner specified in
Section 5.4, and the Issuer shall execute such assignments and other documents
reasonably requested by the Master Servicer in order to effect such transfer. In
addition, if any such breach by the Master Servicer does not trigger such a
purchase obligation but does result in the refusal by a Guarantor to guarantee
the applicable portion of the accrued interest, or the loss of (including any
obligation of the Issuer to repay to the Department) certain Interest Subsidy
Payments and Special Allowance Payments, with respect to a Financed Student
Loan, then, unless such breach, if curable, is cured within 90 days of discovery
or notice, the Master Servicer shall, at its option, either purchase such
Financed Student Loan at the applicable Purchase Amount or reimburse the Issuer
by remitting an amount equal to the sum of all amounts that would have been
payable if not for such breach in the manner specified in Section 5.4. The sole
remedy of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.1, 4.2, 4.3 or 4.4 and the agreement contained in this Section 4.5
shall be to require the Master Servicer to purchase Financed Student Loans or to
reimburse the Issuer as provided above pursuant to this Section 4.5, subject to
the conditions contained herein. The Eligible Lender Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Financed Student Loan or the reimbursement for any
interest penalty pursuant to this Section 4.5.
SECTION 4.6. Servicing Fee. For its services hereunder, the Master
Servicer shall be entitled to receive the Servicing Fee in the manner set forth
in Section 5.5.
SECTION 4.7. Administrator's Certificate. (a) On each
Determination Date, the Administrator shall deliver to the
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Indenture Trustee and the Eligible Lender Trustee in writing the applicable
Noteholders' Interest Distribution Amount, the Noteholders Principal
Distribution Amount and all amounts to be paid to Certificateholders on the
related Distribution Date. On each Determination Date relating to a Quarterly
Distribution Date, the Administrator shall deliver to the Indenture Trustee and
the Eligible Lender Trustee in writing the estimated Transaction Fees
(separately and in the aggregate) for the three succeeding Collection Periods.
Two Business Days prior to the 25th day of each month, the Administrator will
advise the Indenture Trustee and the Eligible Lender Trustee in writing of the
Consolidation Loan Fees for the preceding Collection Period.
(b) On each Determination Date, the Administrator also shall deliver
to the Eligible Lender Trustee, the Indenture Trustee and the Transferor (if
the Transferor is not also the Administrator), an Administrator's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.5 and 5.6, if applicable, for the upcoming Distribution Date.
Financed Student Loans to be repurchased by the Transferor (whether pursuant to
Section 2.3 or 3.2), purchased by the Master Servicer or acquired by any
Guarantor shall be identified by the Administrator by borrower social security
number with respect to such Financed Student Loan (as specified in Schedule A-1
and Schedule A- 2).
(c) On or before the 15th day of each month, the Administrator
shall deliver to the Eligible Lender Trustee, the Indenture Trustee and the
Transferor (if the Transferor is not also the Administrator), the
Administrator's Certificate substantially in the form of Exhibit C setting
forth by component the Available Funds for the immediately preceding Collection
Period.
SECTION 4.8. Annual Statement as to Compliance; Notice of Default.
(a) Each of the Master Servicer and the Administrator shall deliver to the
Transferor, the Eligible Lender Trustee and the Indenture Trustee, on or before
April 30 of each year beginning April 30, 1998, an Officer's Certificate of the
Master Servicer or the Administrator, as the case may be, dated as of December
31 of the preceding year, stating that (i) a review of the activities of the
Master Servicer or the Administrator, as the case may be, during the preceding
12-month period (or, in the case of the first such certificate, during the
period from the Closing Date to December 31, 1997) and of its performance under
this Agreement has been made under such officers' supervision and (ii) to the
best of such officers' knowledge, based on such review, the Master Servicer or
the Administrator, as the case may be, has fulfilled in all material respects
all its obligations under this Agreement and the
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Administration Agreement, respectively, throughout such year or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Eligible
Lender Trustee shall send a copy of each such Officers' Certificate and each
report referred to in Section 4.9 to the Rating Agencies. A copy of each such
Officers' Certificate and each report referred to in Section 4.9 may be obtained
by any Noteholder or Note Owner by a request in writing to the Eligible Lender
Trustee addressed to its Corporate Trust Office, together with evidence
satisfactory to the Eligible Lender Trustee that such Person is a Noteholder.
Pursuant to the Indenture, upon the telephone request of the Eligible Lender
Trustee, the Indenture Trustee will promptly furnish the Eligible Lender Trustee
a list of Noteholders as of the date specified by the Eligible Lender Trustee.
(b) The Master Servicer shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Transferor and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officer's Certificate of
the Master Servicer of any event which with the giving of notice or lapse of
time, or both, would become a Master Servicer Default under Section 8.1(a).
(c) The Administrator shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Master Servicer and the Rating Agencies, promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of the
Administrator of any event which with the giving of notice or lapse of time, or
both, would become an Administrator Default under Section 8.1(b)(1), (2) or
(3).
SECTION 4.9. Annual Independent Certified Public Accountants' Report
or Reports. Each of the Master Servicer and the Administrator shall cause
Ernst & Young LLP, or any other nationally recognized firm of independent
certified public accountants, to deliver to the Transferor, which may also
render its services to the Master Servicer and the Administrator, the Eligible
Lender Trustee, the Indenture Trustee and any Servicer on or before April 30 of
each year beginning April 30, 1998 one or more reports addressed to the Master
Servicer and to the Transferor, the Eligible Lender Trustee and the Indenture
Trustee, to the effect that such accountants have relied upon the assertions by
the Master Servicer's and Administrator's management about the Master
Servicer's and Administrator's compliance with Sections 3.3, 3.4, 4.1, 4.2,
4.3, 4.4, 4.6, 4.7, 5.2, 5.5, 5.6, 5.7, and 5.8 of the Transfer and Servicing
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Agreement and Sections 1(B), 1(D), 1(G), 1(U), 2 and 3 of the Administration
Agreement during the preceding calendar year (or, in the case of the first such
report(s), during the period from the Closing Date to December 31, 1997) and in
any such accountant's opinion(s), such assertions are fairly stated in all
material respects, except for (i) such exceptions as any such firm shall
believe to be immaterial and (ii) such other exceptions as shall be set forth
in such report(s). In the event any such firm requires the Indenture Trustee
or the Eligible Lender Trustee to agree to the procedures performed by such
firm, the Master Servicer shall direct the Indenture Trustee in writing to so
agree; it being understood and agreed that the Indenture Trustee or the
Eligible Lender Trustee, as applicable, will deliver such letter of agreement
in conclusive reliance upon the direction of the Master Servicer, and the
Indenture Trustee and the Eligible Lender Trustee make no independent inquiry
or investigation as to and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
Such report(s) will also indicate that the firm is independent of the
Master Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.10. Access to Certain Documentation and Information
Regarding Financed Student Loans. Upon reasonable prior notice, the Master
Servicer shall, or shall cause each Servicer to, provide access to the Financed
Student Loan Files and the related accounts, records and computer systems
maintained by the Master Servicer or such Servicer, as the case may be, to (i)
the Eligible Lender Trustee and (ii) the Indenture Trustee and their respective
duly authorized representatives, attorneys or auditors. Access shall be
afforded without charge (except that the reasonable cost of photocopying shall
be borne by the party requesting copies), but only upon reasonable request and
during the normal business hours at the respective offices of the applicable
Servicer. Nothing in this Section shall affect the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Master Servicer to provide access
to information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 4.11. Master Servicer and Administrator Expenses. The
Master Servicer and the Administrator shall be severally required to pay all
expenses incurred by them in connection with their respective activities
hereunder, including fees and disbursements of independent accountants, taxes
imposed
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on the Master Servicer or the Administrator, as the case may be, and expenses
incurred in connection with distributions and reports to the Administrator, the
Noteholders and the Eligible Lender Trustee, as the case may be.
SECTION 4.12. Appointment of Servicer. (a) The Master Servicer may
at any time appoint a Servicer to perform all or any portion of its obligations
as Master Servicer hereunder; provided, however, that the Rating Agency
Condition shall have been satisfied in connection therewith; provided further,
that the Master Servicer shall remain obligated and be liable to the Issuer,
the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and
the Noteholders for the servicing and administering of the Financed Student
Loans in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer and
to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Financed Student Loans.
The fees and expenses of each Servicer shall be as agreed between the Master
Servicer and such Servicer from time to time and none of the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders shall have any responsibility therefor. Notwithstanding the
foregoing, AFSA, USA Group, and PHEAA shall be deemed approved Servicers for
all purposes hereunder.
(b) The Master Servicer may at any time appoint one or more of its
Affiliates to perform all or any portion of its obligations hereunder;
provided, however, that the Master Servicer shall remain obligated and liable
to the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders for the servicing and administering of
the Financed Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of
such Affiliate and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Financed
Student Loans. The fees and expenses of each such Affiliate shall be as agreed
between the Master Servicer and such Affiliate from time to time and none of
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders shall have any responsibility therefor.
SECTION 4.13. Subservicing Agreements. (a) The Master Servicer
hereby represents and warrants that: (i) as of the Closing Date it has entered
into Subservicing Agreements with AFSA, USA Group and PHEAA (each a
"Subservicing Agreement"); (ii) each such Subservicing Agreement requires the
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Servicer thereunder to service the Financed Student Loans subject thereto in
accordance in all material respects with all applicable Federal and state laws,
including all applicable standards, guidelines and requirements of the Higher
Education Act.
SECTION 4.14. Incentive Programs. The Servicer shall be permitted
to reduce the applicable interest rate on a PP Loan by 2%, if the Obligor
related to such PP Loan makes the first 48 consecutive monthly payments of such
PP Loan on or prior to the applicable due dates of such PP Loan.
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts. (a) The Indenture
Trustee, for the benefit of the Noteholders, shall establish and maintain in
the name of the Indenture Trustee each of the Collection Account, the Note
Distribution Account, the Reserve Account, the Expense Account and the Monthly
Advance Account. The Eligible Lender Trustee, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Eligible
Lender Trustee the Certificate Distribution Account and the Certificate Monthly
Advance Account. The foregoing accounts are referred to collectively as the
"Trust Accounts." Each such Trust Account shall be an Eligible Deposit Account
and, except for the Certificate Distribution Account and the Certificate
Monthly Advance Account, shall be entitled as follows: "[Name of Account] for
the benefit of PNC Student Loan Trust I and Bankers Trust Company, as Indenture
Trustee, as their interests may appear." The Certificate Distribution Account
and the Certificate Monthly Advance Account shall be entitled as follows: "PNC
Student Loan Trust I Certificate Distribution Account" and PNC Student Loan
Trust I Certificate Monthly Advance Account," respectively.
(b) Funds on deposit in the Trust Accounts shall be invested by the
Indenture Trustee and, in the case of the Certificate Distribution Account and
the Certificate Monthly Advance Account, the Eligible Lender Trustee in
Eligible Investments pursuant to written instructions from the Administrator,
on behalf of the Issuer; provided, however, it is understood and agreed that
the Indenture Trustee and the Eligible Lender Trustee shall not be liable for
any loss arising from such investment in Eligible Investments. All such
Eligible Investments shall be held by the Indenture Trustee and the Eligible
Lender Trustee for the benefit of the Issuer; provided
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that on the Business Day preceding each Distribution Date all interest and other
investment income (net of losses and investment expenses) on funds on deposit
therein shall be deposited into the Collection Account and shall be deemed to
constitute a portion of the Available Funds for the related Distribution Date.
Funds on deposit in the Trust Accounts shall be invested in Eligible Investments
that will mature so that such funds will be available at the close of business
on the Business Day preceding the day on which funds in the applicable Trust
Account may be required to be withdrawn; provided, however, that funds on
deposit in such Trust Accounts may be invested in Eligible Investments of the
Indenture Trustee or of the Eligible Lender Trustee in the case of the
Certificate Distribution Account and Certificate Monthly Advance Account which
may mature so that such funds will be available on the following Business Day.
Funds deposited in a Trust Account on a Business Day which immediately precedes
a Distribution Date upon the maturity of any Eligible Investments are not
required to be invested overnight unless otherwise directed by telephone or
facsimile and confirmed within 24 hours in writing by the Administrator.
(c) (i) The Indenture Trustee (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. Subject
to the Administrator's power to give instructions pursuant to paragraph (b)
above and paragraph (c)(iii) below, the Trust Accounts shall be under the
sole dominion and control of the Indenture Trustee (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) for the benefit of the Noteholders and
Certificateholders. If, at any time, any of the Trust Accounts ceases to be
an Eligible Deposit Account, the Administrator, on behalf of the Issuer,
agrees that it shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which the Rating Agencies may consent)
establish a new Trust Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments to such new Trust Account. In
connection with the foregoing, the Administrator, on behalf of the Issuer,
agrees that, in the event that any of the Trust Accounts are not accounts
with the Indenture Trustee (or the Eligible Lender Trustee with respect to
the Certificate Distribution Account and the Certificate Monthly Advance
Account), the Administrator shall notify the Indenture
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Trustee and the Eligible Lender Trustee in writing promptly upon any of such
Trust Accounts ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the
Indenture Trustee agrees (or, with respect to the Certificate Distribution
Account and the Certificate Monthly Advance Account, the Eligible Lender
Trustee agrees), by its acceptance thereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in Eligible Deposit Accounts, subject to
the last sentence of Section 5.1(c)(i); and, subject to Section
5.1(b), each such Eligible Deposit Account shall be subject to the
exclusive custody and control of the Indenture Trustee (or the
Eligible Lender Trustee with respect to the Certificate Distribution
Account and the Certificate Monthly Advance Account), and the
Indenture Trustee (or the Eligible Lender Trustee with respect to the
Certificate Distribution Account and the Certificate Monthly Advance
Account) shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be Delivered to the Indenture Trustee in
accordance with paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the
Indenture Trustee or a financial intermediary (as such term is defined
in Article 8 of the UCC) acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulation shall be Delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article VIII of the UCC and that is
not governed by clause (C) above shall be Delivered to the Indenture
Trustee in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued
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registration of the Indenture Trustee's (or its nominee's) ownership
of such security.
(iii) The Administrator shall have the power, revocable for
cause or upon the occurrence and during the continuance of an Administrator
Default by the Indenture Trustee or by the Eligible Lender Trustee with the
consent of the Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) for the purpose of permitting the Master
Servicer, the Administrator or the Eligible Lender Trustee to carry out its
respective duties hereunder or under the Trust Agreement or permitting the
Indenture Trustee to carry out its duties under the Indenture.
SECTION 5.2. Collections. The Master Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors with respect to
the Financed Student Loans for which it, rather than a Servicer, is acting as
Primary Servicer (other than Purchased Student Loans), (i) within two Business
Days after it has received an aggregate of $30,000 during any Collection Period
and (ii) on the last Business Day of each Collection Period, all other
collections received during such Collection Period. The Master Servicer shall
cause each other Servicer to remit to the Collection Account, no less frequently
than weekly, all payments by or on behalf of the Obligors with respect to the
Financed Student Loans for which it is acting as Primary Servicer. For purposes
of this Article V, the phrase "payments by or on behalf of obligors" shall mean
payments made with respect to the Financed Student Loans by or on behalf of
borrowers thereof and the Guarantors.
SECTION 5.3. Application of Collections. With respect to each
Financed Student Loan, all collections (including all Guarantee Payments) with
respect thereto shall be applied in accordance with regulations of the
Department and the applicable Guarantor.
SECTION 5.4. Additional Deposits. Within two Business Days after
receipt thereof, the Eligible Lender Trustee (or the Master Servicer on its
behalf) shall deposit in the Collection Account the aggregate amount of
Interest Subsidy Payments and Special Allowance Payments received by it with
respect to the Financed Student Loans, and the Transferor shall deposit in the
Collection Account any amount owed pursuant to Section 3.2 no later than the
last day of the Collection Period during which any such amount is owed. The
Master Servicer shall deposit or cause to be deposited in the Collection
Account the
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aggregate Purchase Amount with respect to Purchased Student Loans
and all other amounts to be paid by the Master Servicer under Section 4.5 when
such amounts are due, and the Transferor shall deposit or cause to be deposited
therein the aggregate Purchase Amount with respect to Purchased Student Loans
and all other amounts to be paid by the Transferor under Sections 3.2 or 9.1
when such amounts are due. The Transferor, the Master Servicer and the
Administrator also shall deposit in the Collection Account all amounts required
to be deposited therein pursuant to, and within the time periods provided by,
Section 2.3. Notwithstanding the foregoing, the Master Servicer shall deposit,
or cause to be deposited, directly into the Reserve Account any payments of or
with respect to principal relating to a Financed Student Loan for which any
payment on account of a Realized Loss was previously distributed (but only up
to the amount of such Realized Loss), and shall deposit, or cause to be
deposited, directly into the Collection Account any payments of or with respect
to interest relating to a Financed Student Loan for which any payment on
account of a Realized Loss was previously distributed.
The Master Servicer also shall, in its sole discretion, deposit into
the Monthly Advance Account the amount of any Monthly Advances determined to be
made by the Master Servicer pursuant to Section 5.10 no later than the
Determination Date relating to the Distribution Date when such amounts are to
be applied as a payment of interest. On each Distribution Date, the Indenture
Trustee will transfer from the Monthly Advance Account to the Eligible Lender
Trustee, by wire transfer no later than 11:00 a.m. New York time, for deposit
into the Certificate Monthly Advance Account the portion of the Monthly
Advance, if any, for such Distribution Date allocable to the Certificates.
Pursuant to Section 5.10, if after making a Monthly Advance the Master Servicer
receives the Guarantee Payment, Special Allowance Payment or Interest Subsidy
Payment for which such Monthly Advance was made, the Master Servicer shall be
reimbursed immediately from such Guarantee Payment, Special Allowance Payment
or Interest Subsidy Payment, as the case may be, on deposit in the Collection
Account up to the amount of the related Monthly Advance or, if such Guarantee
Payment, Special Allowance Payment or Interest Subsidy Payment is not received,
the Master Servicer may reimburse itself from any funds on deposit in the
Collection Account up to the amount of the related Monthly Advance.
SECTION 5.5. Distributions. (a) On each Quarterly Distribution
Date, pursuant to the Administrator's written instructions, the Indenture
Trustee will transfer the Available Funds on deposit in the Collection Account
for the three Collection Periods immediately preceding the month of such
Quarterly Distribution Date (or (x) with respect to the first Quarterly
Distribution Date, from the Closing Date through and including the Collection
Period immediately preceding such
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Quarterly Distribution Date, (y) with respect to clause (i) (A) below , the
Indenture Trustee will transfer on the 25th day of each month (or if such day is
not a Business Day, the next succeeding Business Day) from Available Funds on
deposit in the Collection Account for the Collection Period immediately
preceding such day and (z) with respect to clauses (ii) and (iii) below, on each
Distribution Date related to the Class A-1 Notes, the Indenture Trustee will
transfer the required amount from the Available Funds on deposit in the
Collection Account for the Collection Period immediately preceding the month of
such Distribution Date), in each case in the following manner and in the
following order of priority:
(i) first, to the Expense Account, (A) an amount equal to the
Consolidation Loan Fees with respect to the Collection Period most recently
ended and all overdue Consolidation Loan Fees from any prior Collection Periods
and (B) an amount up to the estimated Transaction Fees for the three immediately
succeeding Collection Periods and all overdue Transaction Fees from prior
Collection Periods (plus (or minus) the difference (or excess) of the actual
Transaction Fees for the three immediately preceding Collection Periods and the
Transaction Fees deposited into the Expense Account on the preceding Quarterly
Distribution Date);
(ii) second, to the Note Distribution Account, an amount up to the sum
of the aggregate Noteholders' Interest Distribution Amount and the Trust Swap
Payment, if any, for such Distribution Date;
(iii) third, to the Note Distribution Account, an amount up to the
Noteholders' Principal Distribution Amount for such Distribution Date;
(iv) fourth, to the Eligible Lender Trustee, for deposit into the
Certificate Distribution Account, an amount up to the Certificateholders'
Interest Distribution Amount for such Distribution Date; and
(v) fifth, if the Outstanding Amount of the Notes has been paid in
full, to the Eligible Lender Trustee, for deposit into the Certificate
Distribution Account, an amount up to the Certificateholders' Principal
Distribution Amount for such Distribution Date.
(b) [Reserved]
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(c) On each Quarterly Distribution Date (and in the case of
clause (i) below, on the 25th day of each month (or if such day is not a
Business Day, the next succeeding Business Day)), the Indenture Trustee,
pursuant to information contained in the Administrator's Certificate delivered
in accordance with Section 4.7, will distribute from the Expense Account (in
addition to any amounts transferred from the Reserve Account pursuant to
Section 5.6) the following amounts in the following order of priority: (i) to
the Department, the Consolidation Loan Fees for the immediately preceding
Collection Period and all overdue Consolidation Loan Fees for any prior
Collection Periods, (ii) to the Master Servicer, the estimated Servicing Fee
for the three immediately succeeding Collection Periods and all overdue
Servicing Fees, (iii) to the Administrator, the estimated Administration Fee
for the three immediately succeeding Collection Periods and all overdue
Administration Fees (iv) to the Indenture Trustee, the estimated Indenture
Trustee Fee for the three immediately succeeding Collection Periods and all
overdue Indenture Trustee Fees, and (v) to the Eligible Lender Trustee, the
estimated Eligible Lender Trustee Fee for the three immediately succeeding
Collection Periods and all overdue Eligible Lender Trustee Fees.
(d) On each Distribution Date, the Indenture Trustee will
distribute to the Noteholders as of the related Record Date and each
Counterparty all amounts transferred to the Note Distribution Account pursuant
to Section 5.5(a)(ii) and (iii) (in addition to any amounts transferred from
the Reserve Account, any amounts deposited into the Monthly Advance Account
pursuant to Section 5.4 and any Parity Percentage Payments transferred from the
Collection Account pursuant to Section 5.5(e)) in the following order of
priority:
(i) first, to each Class of Class A Noteholders and each Counterparty,
the Class A Noteholders' Interest Distribution Amount and the Trust Swap
Payment, respectively (pro rata based upon the portion thereof allocable to each
such Class and each such Counterparty);
(ii) second, to the Class B Noteholders, the Class B Noteholders'
Interest Distribution Amount;
(iii) third, to the Class A-1 Noteholders, the Noteholders' Principal
Distribution Amount until the Outstanding Amount of the Class A-1 Notes has been
paid in full;
(iv) fourth, to the Fixed Rate Notes, the Noteholders' Principal
Distribution Amount in the following order:
(A) after the Outstanding Amount of the Class A-1 Notes
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has been reduced to zero, commencing with (but no earlier than) the
Distribution Date occurring in October, 1998, to the Class A-2 Noteholders,
the remaining Noteholders' Principal Distribution Amount until the Outstanding
Amount of the Class A-2 Notes equals the percentage of the original
Outstanding Amount for such Class set forth for such Distribution Date on the
Scheduled Principal Balance Table;
(B) after the Outstanding Amount of the Class A-2 Notes has been reduced
to zero, commencing with (but not earlier than) the Distribution Date
occurring in October 1999, to the Class A-3 Noteholders, the remaining
Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class A-3 Notes equals the percentage of the original Outstanding Amount for
such Class set forth for such Distribution Date on the Scheduled Principal
Balance Table;
(C) after the Outstanding Amount of the Class A-3 Notes has been
reduced to zero, commencing with (but not earlier than) the Distribution Date
occurring in October 2000, to the Class A-4 Noteholders, the remaining
Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class A-4 Notes equals the percentage of the original Outstanding Amount for
such Class set forth for such Distribution Date on the Scheduled Principal
Balance Table;
(D) after the Outstanding Amount of the Class A-4 Notes has been
reduced to zero, commencing with (but not earlier than) the Distribution Date
occurring in October 2001, to the Class A-5 Noteholders, the remaining
Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class A-5 Notes equals the percentage of the original Outstanding Amount for
such Class set forth for such Distribution Date on the Scheduled Principal
Balance Table;
(E) after the Outstanding Amount of the Class A-5 Notes has been
reduced to zero, commencing with (but not earlier than) the Distribution Date
occurring in October 2002, to the Class A-6 Noteholders, the remaining
Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class A-6 Notes equals the percentage of the original Outstanding Amount for
such Class set forth for such Distribution Date on the Scheduled Principal
Balance Table; and
(F) after the Outstanding Amount of the Class A-6 Notes has been
reduced to zero, commencing with (but not earlier than) the Distribution
Date occurring in October 2003, to the Class A-7 Noteholders, the remaining
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Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class A-7 Notes equals the percentage of the original Outstanding Amount for
such Class set forth for such Distribution Date on the Scheduled Principal
Balance Table;
(v) fifth, after the Outstanding Amount of each Class of Fixed Rate Notes
equals the percentage of the original Outstanding Amount for the respective
Class that is set forth for such Distribution Date on the Scheduled Principal
Balance Table (regardless of whether the Outstanding Amount of any Class of
Fixed Rate Notes has been reduced to zero), to the Class A-8 Noteholders, the
remaining Noteholders' Principal Distribution Amount until the Outstanding
Amount of the Class A-8 Notes shall have been reduced to zero;
(vi) sixth, after the Outstanding Amount of the Class A-8 Notes shall have
been reduced to zero and after the Outstanding Amount of each Class of Fixed
Rate Notes equals the percentage of the original Outstanding Amount for the
respective Class that is set forth for such Distribution Date on the Scheduled
Principal Balance Table (regardless of whether the Outstanding Amount of any
Class of Fixed Rate Notes has been reduced to zero), to the Class A-9
Noteholders, the remaining Noteholders' Principal Distribution Amount until the
Outstanding Amount of the Class A-9 Notes shall have been reduced to zero; and
(vii) seventh, after the Outstanding Amount of the Class A-9 Notes shall
have been reduced to zero, to the Class B Noteholders, the remaining
Noteholders' Principal Distribution Amount until the Outstanding Amount of the
Class B Notes shall have been reduced to zero.
No Class of Fixed Notes will receive as a payment of principal on any
Distribution Date more than the amount needed to reduce its respective
Outstanding Amount to the percentage of the original Outstanding Amount set
forth for such Class on the Scheduled Principal Balance Table. Therefore, on
any Distribution Date the portion, if any, of the Noteholders Principal
Distribution Amount remaining after the Outstanding Amount of each Class of
Fixed Rate Notes has been reduced to such amount and the Outstanding Amount of
the Class A-8 Notes and the Class A-9 Notes has been reduced to zero will remain
on deposit in the Note Distribution Account and applied as payments of principal
on subsequent Distribution Dates in the order and priority set forth herein.
On each Quarterly Distribution Date the Eligible Lender Trustee will
distribute to the Certificateholders as of the related Record Date all amounts
transferred to the Certificate Distribution Account pursuant to Section 5.5(a)
(in addition to any amounts transferred from the Reserve Account and any amount
deposited into the Certificate Monthly Advance Account pursuant
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to Section 5.4) in the following order of priority; (i) first, to the
Certificateholders, the Certificateholders' Interest Distribution Amount and
(ii) second, to the Certificateholders, the Certificateholders' Principal
Distribution Amount. The priority of distributions set forth in this Section
5.5(d) shall be subject to the provisions of Section 5.5(f).
(e) On each Quarterly Distribution Date (and on each
Distribution Date with respect to transfers set forth in clause (ii) below in
respect of the Class A-1 Notes), after making any and all required transfers to
the Expense Account, the Note Distribution Account and, if applicable, the
Certificate Distribution Account pursuant to Section 5.5(a), the Indenture
Trustee will transfer any amounts remaining in the Collection Account (other
than amounts representing payments received during the month in which such
Distribution Date occurs) in the following order of priority: (i) to the
Reserve Account, the amount, if any, necessary to increase the balance thereof
to the Specified Reserve Account Balance, (ii) to the Note Distribution
Account, the Parity Percentage Payment, if any, for such Distribution Date,
(iii) to the Note Distribution Account, the amount of any outstanding
Noteholders' Interest Carryover, (iv) to the Counterparties, the amount of any
Swap Termination Payments and (v) to the Transferor, any amounts remaining on
deposit in the Collection Account other than amounts representing payments
received on or with respect to the Financed Student Loans during the month of
such Distribution Date (amounts transferred to the Transferor pursuant to this
clause (v) shall be transferred by the Indenture Trustee to the account
specified by the Transferor).
(f) Notwithstanding the foregoing, if (x) on any Distribution
Date following all distributions to be made on such Distribution Date, the
Outstanding Amount of the Class A Notes would exceed the sum of the Pool
Balance at the end of the immediately preceding Collection Period plus the
aggregate balance on deposit in the Trust Accounts on such Distribution Date
following such distributions, or (y) an Event of Default has occurred with
respect to payment of the Notes or the Trust Swap Payments, distributions
pursuant to Section 5.5(d) shall be made in the following priority:
(i) first, to each Class of Class A Noteholders and the Counterparties, the
Noteholders' Interest Distribution Amount applicable to each such Class and the
Trust Swap Payment, respectively, pro rata based upon the portion thereof
allocable to each such Class and the Counterparties;
(ii) second, in the case of clause (x) above, (a) to the Class A Noteholders,
the Noteholders' Principal Distribution
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Amount, in the order and priority set forth above in clauses third through
sixth, inclusive, of Section 5.5(d) and in the case of clause (y) above, to each
Class of Class A Noteholders, the Noteholders' Principal Distribution Amount
applicable to such Distribution Date, pro rata based upon the Outstanding Amount
of each Class of Class A Notes until the Outstanding Amount of each Class of
Class A Notes has been paid in full;
(iii) third, to the Class B Noteholders, the Noteholders' Interest
Distribution Amount applicable to the Class B Notes;
(iv) fourth, after the Outstanding Amount of each of the Class A Notes
has been paid in full, to the Class B Noteholders, the Noteholders' Principal
Distribution Amount until the Outstanding Amount of the Class B Notes has been
paid in full;
(v) fifth, to the Class A-8 Noteholders and the Class A-9 Noteholders,
the Noteholders' Interest Carryover applicable to the respective Class of Class
A Notes, pro rata based upon the portion thereof allocable to each such Class;
(vi) sixth, to the Class B Noteholders, the Noteholders' Interest
Carryover applicable to the Class B Notes;
(vii) seventh, to the Counterparties, any Swap Termination Payments;
(viii) eighth, to the Certificateholders, the Certificateholders' Interest
Distribution Amount; and
(ix) ninth, to the Certificateholders, the Certificateholders' Principal
Distribution Amount.
All distributions made to the Noteholders of a Class or the
Certificateholders on each Distribution Date shall be made on a pro rata basis
among the Noteholders of such Class and Certificateholders of record as of the
related Record Date based upon the Outstanding Amount of such Class (or, with
respect to payments of principal on such Class of Notes, the applicable
Principal Factor with respect to such Class) or percentage interest of
Certificates so owned.
SECTION 5.6. Reserve Account. (a) On the Closing Date, the
Transferor shall deposit the Reserve Account Initial Deposit into the Reserve
Account.
(b) If the amount on deposit in the Reserve Account on any Quarterly
Distribution Date (after giving effect to all deposits or withdrawals therefrom
on such Quarterly Distribution Date) is greater than the then applicable
Specified Reserve Account Balance, the Administrator shall instruct the
Indenture Trustee in writing to withdraw such excess from the Reserve
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Account and (A) to deposit into the Note Distribution Account, an amount equal
to the lesser of such excess and the amount described in Section 5.5(e)(iii) for
such Distribution Date (to the extent not otherwise paid to the Note
Distribution Account on such Distribution Date), (B) to deposit into the Note
Distribution Account the lesser of such excess (after giving effect to clause
(A) above) and any amounts required to be paid by the Transferor or the Master
Servicer pursuant to Section 3.2 or 4.5 as a result of breaches of
representations and warranties made in Section 3.1, 4.1, 4.2, 4.3 or 4.4 to the
extent the Transferor or the Master Servicer has not made such payments within
the required time period, and (C) to distribute the remaining amount of such
excess (after giving effect to clauses (A) and (B) above) to the Transferor.
Amounts properly distributed pursuant to this paragraph (b) shall be deemed
released from the Trust Estate and the security interest therein granted to the
Indenture Trustee, and the Transferor shall in no event thereafter be required
to refund any such distributed amounts.
(c) Following the payment in full of the aggregate Outstanding
Amount of the Notes and of all other amounts owing or to be distributed
hereunder or under the Indenture or the Trust Agreement to Noteholders,
Certificateholders, the Master Servicer or the Administrator and the
termination of the Trust, any amount remaining on deposit in the Reserve
Account shall be distributed to the Transferor. The Transferor shall in no
event be required to refund any amounts properly distributed pursuant to this
Section 5.6(c).
(d) (i) In the event that on any Quarterly Distribution Date (and
with respect to Section 5.5(c)(i), the 25th day of each month, or if such day is
not a Business Day the next succeeding Business Day), any amounts to be
distributed as calculated pursuant to Section 5.5(c)(i)-(v) exceed the amount on
deposit in the Expense Account available for such purposes, the Administrator
shall instruct the Indenture Trustee to withdraw from the Reserve Account the
lesser of such excess and the amount on deposit in the Reserve Account (after
giving effect to each withdrawal in the order specified in Section
5.5(c)(i)-(v)) and deposit such withdrawn amount in the Expense Account for
distribution as provided in Section 5.5.
(ii) In the event that the sum of the Noteholders' Distribution
Amount and the Trust Swap Payment for a Distribution Date exceeds the amount
in the Note Distribution Account for such Distribution Date available for
such purposes, the Administrator shall instruct the Indenture Trustee to
withdraw from the Reserve Account an
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amount equal to the lesser of such excess, and the amount on deposit in the
Reserve Account, (after giving effect to paragraph (d)(i) above), and deposit
such withdrawn amount into the Note Distribution Account for distribution as
provided in Section 5.5.
(iii) In the event that the Certificateholders' Distribution Amount
for a Distribution Date exceeds the amount for such Distribution Date
available for such purposes, the Administrator shall instruct the Indenture
Trustee on such Distribution Date to withdraw from the Reserve Account an
amount equal to the lesser of such excess, and the amount on deposit in the
Reserve Account (after giving effect to paragraphs (d)(i) and (d)(ii) above),
and to deposit such withdrawn amount in the Certificate Distribution Account
for distribution as provided in Section 5.5.
SECTION 5.7. Statements to Certificateholders and Noteholders. On
each Determination Date preceding a Distribution Date, the Master Servicer or
the Administrator shall provide to the Indenture Trustee with a copy to the
Rating Agencies (for the Indenture Trustee to forward on such succeeding
Distribution Date to each Noteholder of the applicable Class of record and to
the Eligible Lender Trustee for the Eligible Lender Trustee to forward on
such succeeding Distribution Date to each Certificateholder (if such
Certificateholder is not the Transferor) of record, a statement substantially
in the form of Exhibits A and B, respectively, setting forth at least the
following information with respect to such Distribution Date or the preceding
Collection Period or Collection Periods, to the extent applicable:
(i) the Principal Factor for each Class of Notes;
(ii) the amount of the distribution allocable to principal on each
Class of Notes;
(iii) the amount of the distribution allocable to interest on each Class
of Notes and on the Certificates, together with the interest rates applicable
with respect thereto (indicating, in the case of the LIBOR Rate Notes, whether
such interest rates are based on One-Month LIBOR or on the Net Loan Rate, and
specifying what each such interest rate would have been if it had been
calculated using the alternate basis);
(iv) the amount of the distribution, if any, allocable to any
Noteholders' Interest Carryover together
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with the outstanding amount, if any, thereof after giving effect to any
such distribution;
(v) the Pool Balance as of the close of business on the last day of each
preceding Collection Period since the prior Distribution Date;
(vi) the aggregate outstanding principal amount of each Class of Notes
as of such Distribution Date, after giving effect to payments allocated to
principal reported under clause (ii) above;
(vii) the amount of the Servicing Fee, the Administration Fee, the
Indenture Trustee Fee and the Eligible Lender Trustee Fee to be allocated on
the upcoming Distribution Date;
(viii) the amount of the aggregate Realized Losses, if any, for each
Collection Period since the last Distribution Date and the aggregate amount,
if any, received (stated separately for interest and principal) received
during such Collection Periods relating to Financed Student Loans for which a
Realized Loss was previously allocated;
(ix) the amount of the distribution attributable to amounts in the
Reserve Account, the amount of any other withdrawals from the Reserve Account
for such Distribution Date, the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on such Distribution
Date, the then applicable Parity Percentage and the amount of the
distribution, if any, attributable to Parity Percentage Payments;
(x) the aggregate amount, if any, paid for Financed Student Loans
purchased from the Trust during each preceding Collection Period since the
last Distribution Date (or since the Closing Date in the case of the first
Distribution Date);
(xi) during the Exchange period only, the aggregate Issuer Consolidation
Payments and Adjustment Payments, stated separately, for each preceding
Collection Period since the last Distribution Date (or since the Closing Date
in the case of the first Distribution Date); and
(xii) the number and principal amount of Financed Student Loans, as of
the end of each preceding Collection Period since the last Distribution Date
(or since the Closing Date in the case of the first Distribution Date), that
are (i) 30 to 60 days delinquent, (ii) 61 to 90 days
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delinquent, (iii) 91 to 120 days delinquent, (iv) more than 120 days
delinquent and (v) for which claims have been filed with the appropriate
Guarantor and which are awaiting payment.
5.8. Expense Account. The Administrator shall instruct the
Indenture Trustee to deposit funds into, and withdraw funds from, the Expense
Account as set forth in Sections 5.5 and 5.6. Any funds remaining in the
Expense Account upon termination of the Trust shall be distributed to the
Master Servicer as additional servicing compensation.
5.9. Note Distribution Account and Certificate Distribution Account.
The Administrator shall instruct the Indenture Trustee and the Eligible Lender
Trustee to deposit funds into, and withdraw funds from, the Note Distribution
Account and the Certificate Distribution Account, as applicable, as set forth
in Sections 5.5, 5.6 and 5.10.
5.10. Monthly Advances. If the Master Servicer has applied for a
Guarantee Payment from a Guarantor or an Interest Subsidy Payment or a Special
Allowance Payment from the Department, and the Master Servicer has not received
the related payment prior to the end of the Collection Period immediately
preceding the Distribution Date on which such amount would be required to be
distributed as a payment of interest, the Master Servicer may, no later than
the Determination Date relating to such Distribution Date, in its sole
discretion, deposit into the Monthly Advance Account an amount up to the amount
of such payments applied for but not received (such deposits by the Master
Servicer are referred to herein as "Monthly Advances"). Such Monthly Advances
are recoverable by the Master Servicer (i) first, from the Guarantee Payment,
Interest Subsidy Payment or Special Allowance Payment, as the case may be, for
which such Monthly Advance was made and (ii) second, if such amounts have not
been received, from collections received generally on or with respect to the
Financed Student Loans. The Master Servicer shall have no obligation, legal or
otherwise, to make any Monthly Advance, and the making of or decision to make a
particular Monthly Advance shall not create any obligation on the Master
Servicer, legal or otherwise, to make any future Monthly Advances.
5.11. Certificate Interest. During the initial Interest Period, the
Certificates shall bear interest at the Certificate Initial Rate. Thereafter,
the Certificates shall bear interest during each applicable Interest Period at
the Certificate Rate.
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During each Interest Period, interest at the Certificate Rate shall
accrue daily and shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.
The Master Servicer shall calculate One-Month LIBOR on each Rate
Determination Date and shall notify the Eligible Lender Trustee and the
Indenture Trustee of One-Month LIBOR. The determination by the Master Servicer
of One-Month LIBOR shall (in the absence of manifest error) be final and
binding upon all parties.
ARTICLE VI
The Transferor and the Master Servicer
SECTION 6.1. Representations of Transferor and Master Servicer. The
Transferor and Master Servicer make the following representations with respect
to the Transferor and the Master Servicer, respectively, on which the Issuer is
deemed to have relied in acquiring (through the Eligible Lender Trustee) the
Financed Student Loans being conveyed pursuant to this Agreement. The
representations speak as of the Closing Date, in the case of the Initial
Financed Student Loans, and as of the applicable Exchange Date, in the case of
the Exchanged Student Loans transferred on such Exchange Date, but shall
survive the contribution, transfer and assignment of the Financed Student Loans
to the Eligible Lender Trustee on behalf of the Issuer and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Each of the Transferor and the
Master Servicer is duly organized and validly existing as a national banking
association with the power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, except for such power and authority the absence of which
would not have a material adverse effect on the Master Servicer or Transferor,
as the case may be, or their ability to consummate the transaction contemplated
by the Basic Documents and the Transferor had at all relevant times, and has,
the power, authority and legal right to originate, acquire and own the Financed
Student Loans and the Master Servicer had at all relevant times, and has the
power, authority and legal right to service the Financed Student Loans.
(b) Due Qualification. The Master Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership and
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lease of property or the conduct of its business (including the servicing of the
Financed Student Loans for which it acts as Primary Servicer as required by this
Agreement) shall require such qualifications except for such licenses and
approvals the absence of which would not have a material adverse effect on the
Master Servicer or its ability to consummate the transactions contemplated by
the Basic Documents.
(c) Power and Authority. Each of the Transferor and the Master
Servicer has the requisite corporate power and authority to execute and deliver
this Agreement and to carry out its terms; the Transferor has requisite
corporate power and authority to transfer and assign the property to be
contributed and assigned to and deposited with the Issuer (or with the Eligible
Lender Trustee on behalf of the Issuer) and the Transferor has duly authorized
such transfer and assignment to the Issuer (or to the Eligible Lender Trustee
on behalf of the Issuer) by all necessary corporate action on Transferor's
part; and the execution, delivery and performance of this Agreement have been
duly authorized by the Transferor and the Master Servicer by all necessary
corporate action on their respective parts.
(d) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Transferor and the Master Servicer,
enforceable against the Transferor and the Master Servicer in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and similar laws relating to creditors' rights generally
or the rights of creditors of banks the deposit accounts of which are insured by
the FDIC and subject to general principles of equity.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not violate, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the charter or by-laws
of the Transferor or the Master Servicer, or any material indenture, agreement
or other material instrument to which the Transferor or the Master Servicer is a
party or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such material
indenture, agreement or other material instrument (other than pursuant to the
Basic Documents); nor violate any material law or, to the knowledge of either
the Transferor or the Master Servicer, any material order, rule or regulation
applicable to it of any court or of any Federal or State regulatory body,
administrative agency or
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other governmental instrumentality having jurisdiction over the Transferor
or the Master Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Transferor or the Master Servicer or, to its best knowledge,
threatened against the Transferor or the Master Servicer, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over it or its properties: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other Basic Documents, the Notes or
the Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by either the Transferor or the Master
Servicer of its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the Federal or State income tax
attributes of the Issuer, the Notes or the Certificates.
(g) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by either the Transferor or the Master Servicer in
connection with the execution and delivery by either the Transferor or the
Master Servicer of this Agreement and the performance by either the Transferor
or the Master Servicer of the transactions expressly contemplated by this
Agreement, have been duly obtained, effected or given and are in full force and
effect, except such as may be required by the blue sky laws of any jurisdiction
in connection with the sale and distribution of the Notes and the Certificates
for which no representation or warranty is being given.
(h) No Amendment or Waiver. Except as provided in Section 4.14, no
provision of a Financed Student Loan has been waived, altered or modified in
any respect, except pursuant to a document, instrument or writing included in
the Financed Student Loan File, and no such amendment, waiver, alteration or
modification causes such Financed Student Loan not to conform in any material
respect to the other warranties contained in this Section or those of the
Transferor contained in Section 3.1.
(i) Location of Financed Student Loan Files. The Financed Student
Loan Files are kept in accordance with Section 3.4(b).
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SECTION 6.2. Existence. Except as permitted by Section 6.5, during
the term of this Agreement, each of the Transferor and the Master Servicer will
keep in full force and effect its existence, rights and franchises as a
national banking association under the laws of the jurisdiction of its
organization.
SECTION 6.3. Liability and Indemnities. (a) Each of the Transferor
and the Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Transferor and the
Master Servicer, as the case may be, under this Agreement.
(b) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee and the Indenture Trustee and their
officers, directors, employees and agents from and against any taxes that may
at any time be asserted against any such Person with respect to the
transactions contemplated herein (except (i) taxes arising out of fees paid to
the Eligible Lender Trustee or the Indenture Trustee, (ii) arising out of the
transfer of the Financed Student Loans to the Eligible Lender Trustee, (iii)
taxes arising out of the issuance and sale of the Certificates and the Notes,
(iv) taxes arising out of the ownership of the Financed Student Loans
(including, without limitation, income taxes), and (v) taxes arising out of
distributions on the Certificates and the Notes) and costs and expenses in
defending against the same.
(c) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, and the Noteholders
and the officers, directors, employees and agents of the Issuer, the Eligible
Lender Trustee and the Indenture Trustee from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or imposed
upon such Person through, (i) the Transferor's willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
and (ii) the Transferor's or the Issuer's violation of Federal or state
securities laws in connection with the offering and sale of the Notes and the
Certificates; provided, however, the Transferor shall not be liable for any
such costs, expenses, losses, claims, damages and liabilities imposed upon such
Person to the extent that they arise out of or result from such Person's
negligence, willful malfeasance or bad faith or a breach of the representations
and warranties of such Person in this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, in no event shall the Transferor be
liable under any theory of tort, contract, strict liability or
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other legal or equitable theory for any lost profits or exemplary, punitive,
special, incidental, indirect or consequential damages, each of which is hereby
excluded by agreement of the parties regardless of whether or not the Transferor
has been advised of the possibility of such damages.
(d) The Transferor shall indemnify, defend and hold harmless the
Eligible Lender Trustee and its officers, directors, employees and agents from
and against, all reasonable costs, expenses, losses, claims, damages,
obligations and liabilities arising out of, incurred in connection with or
relating to the Trust Agreement, the other Basic Documents, the Trust Estate,
the acceptance or performance of the trusts and duties set forth herein and in
the Trust Agreement or the action or the inaction of the Eligible Lender
Trustee hereunder and under the Trust Agreement, except to the extent that such
cost, expense, loss, claim, damage, obligation or liability: (i) shall be due
to the willful misfeasance, bad faith or negligence of the Eligible Lender
Trustee, (ii) shall arise from any breach by the Eligible Lender Trustee of its
covenants under any of the Basic Documents; or (iii) shall arise from the
breach by the Eligible Lender Trustee of any of its representations or
warranties set forth in Section 7.3 of the Trust Agreement. Notwithstanding
anything to the contrary contained in this Agreement, in no event shall the
Transferor be liable under any theory of tort, contract, strict liability or
other legal or equitable theory for any lost profits or exemplary, punitive,
special, incidental, indirect or consequential damages, each of which is hereby
excluded by agreement of the parties regardless of whether or not the
Transferor has been advised of the possibility of such damages.
(e) The Transferor shall pay any and all taxes levied or assessed
upon all or any part of the Trust Estate (other than those taxes expressly
excluded from the Transferor's responsibilities pursuant to the parenthetical
in paragraph (b) above).
(f) Pursuant to Section 6.7 of the Indenture, and subject to the
limitations therein, the Transferor shall pay reasonable compensation to the
Indenture Trustee and shall reimburse the Indenture Trustee for all reasonable
expenses, disbursements and advances, and indemnify, defend and hold harmless
the Indenture Trustee and its officers, directors, employees and agents from
and against all costs, expenses, losses, claims, damages and liabilities, to
the extent and in the manner provided in the Indenture. Notwithstanding
anything to the contrary contained in this Agreement, in no event shall the
Transferor be liable under any theory of tort, contract, strict liability or
other legal or equitable theory for any lost
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profits or exemplary, punitive, special, incidental, indirect or consequential
damages, each of which is hereby excluded by agreement of the parties regardless
of whether or not the Transferor has been advised of the possibility of such
damages.
(g) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, and the Noteholders and the officers, directors, employees
and agents of the Issuer, the Eligible Lender Trustee and the Indenture Trustee
from and against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or imposed upon such Person through, the Master
Servicer's willful misfeasance, bad faith or negligence in the performance of
its duties under this Agreement, where the final determination that any such
loss, liability or expense arose out of, or was imposed upon any such Person
through, any such negligence, willful misfeasance or bad faith on the part of
the Master Servicer is established by a court of law, by an arbitrator or by
way of settlement agreed to by the Master Servicer; provided, however, the
Master Servicer shall not be liable for any such costs, expenses, losses,
claims, damages and liabilities imposed upon such Person to the extent that
they arise out of or result from such Person's negligence, willful malfeasance
or bad faith or a breach of the representations and warranties of such Person
in this Agreement. Notwithstanding the foregoing, if the Master Servicer is
rendered unable, in whole or in part, by a force outside the control of the
Master Servicer (including acts of God, acts of war, severe weather,
communications failures or failures to receive electronic data or labor
disputes or strikes, fires, earthquakes and other disasters) to satisfy its
obligations under this Agreement, the Master Servicer shall not be deemed to
have breached any such obligation upon delivery of written notice of such event
to the other parties hereto, for so long as the Master Servicer remains unable
to perform such obligation as a result of such event. Notwithstanding anything
to the contrary contained in this Agreement, in no event shall the Master
Servicer be liable under any theory of tort, contract, strict liability or
other legal or equitable theory for any lost profits or exemplary, punitive,
special, incidental, indirect or consequential damages, each of which is hereby
excluded by agreement of the parties regardless of whether or not the Master
Servicer has been advised of the possibility of such damages.
(h) Indemnification under this Section shall survive the resignation
or removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Transferor or the Master Servicer, as the
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case may be, shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Transferor or the Master Servicer, as the case may be without
interest.
(i) Promptly after receipt by an indemnified party under this
Section 6.3 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6.3, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under Section 6.3., except to the extent the indemnifying party is materially
prejudiced by such failure. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of the
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 6.3 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying party be liable for
fees and expenses for more than one counsel separate from their own counsel for
all indemnified parties in connection with any one action or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. An indemnifying party will not, without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
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includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
The indemnified party will not, without the prior written consent of
the indemnifying party, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in which indemnification may be sought hereunder.
SECTION 6.4. [Reserved]
SECTION 6.5. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor, the Administrator or the Master Servicer. Any
Person (a) into which the Transferor, the Administrator or the Master Servicer,
as the case may be, may be merged or consolidated, (b) which may result from any
merger or consolidation to which the Transferor, the Administrator or the Master
Servicer, as the case may be, shall be a party or (c) which may succeed to the
properties and assets of the Transferor, the Administrator or the Master
Servicer, as the case may be, substantially as a whole, shall be the successor
to the Transferor, the Administrator or the Master Servicer, as the case may be,
without the execution or filing of any document or any further act by any of the
parties to this Agreement or the Administration Agreement; provided, however,
that each of the Transferor, the Administrator and the Master Servicer hereby
covenants that it will not consummate any of the foregoing transactions except
upon satisfaction of the following: (i) the surviving Transferor, Administrator
or Master Servicer, as the case may be, if other than PNC Bank, National
Association or a PNC Subsidiary or PNC Bank Corp., executes an agreement of
assumption to perform every obligation of the Transferor, the Administrator or
the Master Servicer, as the case may be, under this Agreement and the
Administration Agreement, (ii) immediately after giving effect to such
transaction, no Master Servicer Default (in the case of the Master Servicer) or
no Administrator Default (in the case of the Administrator) shall have occurred
and be continuing, (iii) the Transferor, the Administrator or the Master
Servicer, as the case may be, if other than PNC Bank National Association or a
PNC Subsidiary or PNC Bank Corp. shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iv) such transaction will not result in a material
adverse Federal or state tax consequence to the Issuer relating to its tax
classification, or
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to the Noteholders, considered as a whole, relating to a change in the
characterization of the Notes and (v) unless "PNC Bank, National Association" is
the surviving entity or name, the Transferor, the Administrator or the Master
Servicer, as the case may be, shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating that,
in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and Indenture Trustee, respectively, in the Financed Student Loans, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interests. Nothing in this Agreement or
any other Basic Document shall be deemed to restrict or prohibit, and no consent
of Noteholders or Certificateholders, supplemental agreement, Officer's
Certificate (except to the extent provided in clause (12) below of this Section
6.5) or Opinion of Counsel (except to the extent provided in clause (v) above of
this Section 6.5) shall be required in the case of, the merger of a PNC
Subsidiary with a PNC Subsidiary or PNC Bank Corp., the consolidation of a PNC
Subsidiary and a PNC Subsidiary or PNC Bank Corp., or the sale or other
disposition of all or substantially all of the assets of a PNC Subsidiary to
another PNC Subsidiary or PNC Bank Corp., if, in any such case in which the
surviving, resulting or acquiring entity is not PNC Bank Corp., PNC Bank Corp.
would own, directly or indirectly, at least eighty percent (80%) of the voting
securities of the PNC Subsidiary surviving such merger, resulting from such
consolidation or acquiring such assets. For the purpose of this Section 6.5,
"PNC Subsidiary" means each of (1) PNC Bank, National Association, (2) PNC Bank,
Ohio, National Association, (3) PNC Bank, Kentucky, Inc., (4) PNC Bank, Indiana,
Inc., (5) PNC Bank, Delaware, (6) PNC National Bank of Delaware, (7) PNC
National Bank, (8) PNC Mortgage Bank, N.A., (9) PNC Bank, New England, (10) PNC
Bank FSB, (11) any other banking subsidiaries of PNC Bank Corp. the consolidated
assets of which constitute twenty percent (20%) or more of the consolidated
assets of PNC Bank Corp. and its consolidated subsidiaries, (12) any other
banking subsidiary of PNC Bank Corp. designated as a PNC Subsidiary pursuant to
a Board Resolution and set forth in an Officer's Certificate delivered to the
Eligible Lender Trustee and the Indenture Trustee, and (13) any subsidiary of
PNC Bank Corp. that owns, directly or indirectly any voting securities, or
options, warrants or rights to subscribe for or purchase voting securities of
any PNC Subsidiary under clauses (1) through (12), and in the case of each of
clauses (1) through (13) their respected successors (whether by consolidation,
merger, conversion, transfer of substantially all their assets and business or
otherwise) so long as any successor is a banking
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subsidiary (in the case of clauses 1 through 12)) or a subsidiary (in the case
of clause (13)) of PNC Bank Corp. References to PNC Bank Corp. include any name
change. "Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of PNC Bank Corp. to have been duly adopted
by the Board of Directors of PNC Bank Corp., or such committee of the Board of
Directors or officers of PNC Bank Corp. to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Eligible Lender Trustee and
the Indenture Trustee.
SECTION 6.6. Limitation on Liability of Transferor, Master Servicer
and Others. (a) The Transferor, the Master Servicer and any director or
officer or employee or agent of either may rely in good faith on the advice of
counsel or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
(b) Neither the Transferor, the Master Servicer nor any of its
directors, officers, employees or agents shall be under any liability to the
Issuer, the Noteholders, the Certificateholders, any Counterparty, the
Indenture Trustee or the Eligible Lender Trustee except as provided under this
Agreement or the Administration Agreement for any action taken or for
refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided, however, that this provision shall not protect
the Transferor or Master Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of their respective duties under this Agreement
or the Administration Agreement.
Except as provided in this Agreement, the Transferor and the Master
Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its duties in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Transferor or the Master Servicer may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement or the Administration
Agreement and the Noteholders under the Indenture.
SECTION 6.7. Transferor May Own Certificate or Notes. The
Transferor and any Affiliate thereof may in its individual
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or any other capacity become the owner or pledgee of Certificates or Notes with
the same rights as it would have if it were not the Transferor or an Affiliate
thereof, except as expressly provided herein or in any other Basic Document.
SECTION 6.8. Master Servicer Not to Resign. Subject to the
provisions of Section 6.5, PNC Bank, National Association shall not resign from
the obligations and duties imposed on it as Master Servicer under this
Agreement except upon determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law or shall
violate any final order of a court or administrative agency with jurisdiction
over it or its properties. Notice of any such determination permitting
resignation shall be communicated to the Eligible Lender Trustee and the
Indenture Trustee at the earliest practicable time (and, if such communication
is not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to the Eligible Lender Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee or a successor Master Servicer
shall have assumed the responsibilities and obligations of PNC Bank, National
Association in accordance with Section 8.2.
ARTICLE VII
The Administrator
SECTION 7.1. Representations of the Administrator. The Administrator
makes the following representations on which the Issuer is deemed to have
relied in acquiring (through the Eligible Lender Trustee) the Financed Student
Loans being conveyed pursuant to this Agreement. The representations speak as
of the Closing Date, in the case of the Initial Financed Student Loans, and as
of the applicable Exchange Date, in the case of the Exchanged Student Loans
being transferred on such Exchange Date, but shall survive the contribution,
transfer and assignment of the Financed Student Loans to the Eligible Lender
Trustee on behalf of the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Administrator is duly
organized and validly existing as a national banking association with the power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted except
for such power and authority the absence of which would
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not have a material adverse effect on the Administrator or its ability to
consummate the transactions contemplated by the Basic Documents, and had at all
relevant times, and has, the power, authority and legal right, to administer the
Financed Student Loans.
(b) Power and Authority of the Administrator. The
Administrator has the requisite corporate power and authority to execute and
deliver this Agreement and the Administration Agreement and to carry out their
respective terms; and the execution, delivery and performance of this Agreement
and the Administration Agreement have been duly authorized by the Administrator
by all necessary corporate action on its part.
(c) Binding Obligation. This Agreement and the
Administration Agreement each constitutes a legal, valid and binding obligation
of the Administrator, enforceable against the Administrator in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and similar laws relating to creditors' rights generally
or the rights of creditors of banks the deposit accounts of which are insured
by the FDIC or and subject to general principles of equity.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the Administration Agreement and the
fulfillment of the terms hereof or thereof do not violate, result in any breach
of any of the terms and provisions of, nor constitute (with or without notice
of lapse of time or both) a default under, the articles of incorporation or
by-laws of the Administrator, or any material indenture, agreement or other
instrument to which the Administrator is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such material indenture, agreement or other
material instrument (other than pursuant to the Basic Documents); nor violate
any material law or, to the knowledge of the Administrator, any material order,
rule or regulation applicable to it of any court or of any Federal or State
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Administrator or its properties.
(e) No Proceedings. There are no proceedings or
investigations pending against the Administrator or, to its best knowledge,
threatened against the Administrator, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over it or its properties: (i) asserting the invalidity of this Agreement or
the Administration Agreement, (ii) seeking to prevent the
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consummation of any of the transactions contemplated by this Agreement or the
Administration Agreement or (iii) seeking any determination or ruling that could
reasonably be expected to have a material and adverse effect on the performance
by the Administrator of its obligations under, or the validity or enforceability
of, this Agreement or the Administration Agreement.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Administrator in its capacity as the
Administrator in connection with the execution and delivery by the
Administrator of this Agreement or the Administration Agreement and the
performance by the Administrator in its capacity as the Administrator of the
transactions contemplated by this Agreement or the Administration Agreement,
have been duly obtained, effected or given and are in full force and effect.
SECTION 7.2. Liability and Indemnities. (a) The Administrator
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Administrator under this Agreement or the
Administration Agreement.
The Administrator and any of its directors, officers, employees or
agents may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person.
Except as provided in this Agreement or the Administration Agreement,
the Administrator shall not be under any obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its duties to
administer the Financed Student Loans and the Trust in accordance with this
Agreement and the Administration Agreement, and that in its opinion may involve
it in any expense or liability; provided, however, that the Administrator may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement and the Noteholders
under the Indenture.
(b) The Administrator shall indemnify, defend and hold harmless from
its funds, the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Master Servicer, the Noteholders and the Certificateholders and the officers,
directors, employees and agents of the Issuer, the Eligible
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Lender Trustee, Indenture Trustee, the Noteholders and the Certificateholders
from and against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or imposed upon such Person through, the
Administrator's willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement or the Administration Agreement, or by reason
of reckless disregard of its obligations and duties under this Agreement or the
Administration Agreement, where the final determination that any such loss,
liability or expense arose out of, or was imposed upon any such Person through,
any such negligence, willful misfeasance or bad faith on the part of the
Administrator is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Administrator. Notwithstanding the foregoing, if
the Administrator is rendered unable, in whole or in part, by a force outside
the control of the Administrator (including acts of God, acts of war, severe
weather, communications failures or failures to receive electronic data or labor
disputes or strikes, fires, earthquakes and other disasters) to satisfy its
obligations under this Agreement, the Administrator shall not be deemed to have
breached any such obligation upon delivery of written notice of such event to
the other parties hereto, for so long as the Administrator remains unable to
perform such obligation as a result of such event; provided, however, the
Administrator shall not be liable for any such costs, expenses, losses, claims,
damages and liabilities imposed upon such Person to the extent that they arise
out of or result from such Person's negligence, willful malfeasance or bad faith
or a breach of the representations and warranties of such Person in this
Agreement or the Administration Agreement. Notwithstanding anything to the
contrary contained in this Agreement or the Administration Agreement, in no
event shall the Administrator be liable under any theory of tort, contract,
strict liability or other legal or equitable theory for any lost profits or
exemplary, punitive, special, incidental, indirect or consequential damages,
each of which is hereby excluded by agreement of the parties regardless of
whether or not the Administrator has been advised of the possibility of such
damages.
(c) Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
and the termination of this Agreement or the Indenture or the Trust Agreement,
as applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Administrator shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Administrator without
interest.
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(d) Promptly after receipt by an indemnified party under this
Section 7.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7.2, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under Section 7.2., except to the extent the indemnifying party is materially
prejudiced by such failure. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of the
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7.2 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying party be liable for
fees and expenses for more than one counsel separate from their own counsel for
all indemnified parties in connection with any one action or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. An indemnifying party will not, without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding.
The indemnified party may not, without the prior written consent of
the indemnifying party, settle, compromise or
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consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in which indemnification may be sought
hereunder.
SECTION 7.3. Administrator Not to Resign. Subject to the provisions
of Section 6.5, PNC Bank, National Association shall not resign from the
obligations and duties imposed on it as Administrator under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law or shall violate
any final order of a court or administrative agency with jurisdiction over it
or its properties. Notice of any such determination permitting resignation
shall be communicated to the Eligible Lender Trustee and the Indenture Trustee
at the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee and the Indenture Trustee concurrently
with or promptly after such notice. No such resignation shall become effective
until the Indenture Trustee or a successor Administrator shall have assumed the
responsibilities and obligations of PNC Bank, National Association in
accordance with Section 8.2.
SECTION 7.4. Additional Services. Notwithstanding anything in the
Administration Agreement to the contrary, the Administrator is authorized and
directed to prepare, execute on behalf of the Trust in its capacity as
Administrator, and file any and all reports required to be filed under the
Exchange Act by the Trust as a result of the registration of the Notes under
the Securities Act. The Trust hereby ratifies and confirms as actions of the
Trust the execution by the Administrator on behalf of the Trust of the
Registration Statement on Form S-3, Registration No. 333-25433-01, and each
amendment thereto, and any related correspondence with Securities and Exchange
Commission, the Current Report on Form 8-K dated as of June 19, 1997, and the
Letter of Representations to The Depository Trust Company with respect to the
Notes.
SECTION 7.5. Amendment to Administration Agreement. Any reference
to "Majority Noteholder" contained in the Administration Agreement shall have
no force and effect.
ARTICLE VIII
Default
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SECTION 8.1. Master Servicer Default; Administrator Default. (a)
If any one of the following events (a "Master Servicer Default") shall occur
and be continuing:
(1) any failure by the Master Servicer (i) to deliver to
the Indenture Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents or (ii) in the event that daily deposits into
the Collection Account are not required, to deliver to the Administrator or
the Eligible Lender Trustee any payment required by the Basic Documents,
which failure in case of either clause (i) or (ii) continues unremedied for
three Business Days after written notice of such failure is received by the
Master Servicer from the Eligible Lender Trustee, the Indenture Trustee or
the Administrator or after discovery of such failure by an officer of the
Master Servicer; or
(2) any failure by the Master Servicer duly to observe or
to perform in any material respect any other covenants or agreements of the
Master Servicer set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of
Noteholders and Certificateholders and (ii) continues unremedied for a period
of 60 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Master Servicer by
the Indenture Trustee, the Eligible Lender Trustee, or the Administrator or
(B) to the Master Servicer and to the Indenture Trustee and the Eligible
Lender Trustee by the Noteholders, representing not less than 25% of the
Outstanding Amount of the Notes or
(3) an Insolvency Event occurs with respect to the Master
Servicer; or
(4) any limitation, suspension or termination by the
Department of the Master Servicer's eligibility to service Student Loans which
materially and adversely affects the Master Servicer's ability to service the
Financed Student Loans;
then, and in each and every case, so long as the Master Servicer Default shall
not have been remedied, the Indenture Trustee or the Noteholders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Master Servicer (and to the Indenture Trustee and
the Eligible Lender Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 6.3
hereof) of the Master Servicer under this Agreement. On or after the receipt
by the
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Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Financed Student Loans or otherwise, shall, without further
action, pass to and be vested in the Indenture Trustee or such successor Master
Servicer as may be appointed under Section 8.2, and, without limitation, the
Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Financed Student Loans and related
documents, or otherwise. The predecessor Master Servicer shall cooperate with
the successor Master Servicer, the Indenture Trustee and the Eligible Lender
Trustee in effecting the termination of the responsibilities and rights of the
predecessor Master Servicer under this Agreement, including the transfer to the
successor Master Servicer for administration by it of all cash amounts that
shall at the time be held by the predecessor Master Servicer for deposit, or
shall thereafter be received by it with respect to a Financed Student Loan. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the Financed Student Loan Files from a current Master Servicer
to the successor Master Servicer and amending this Agreement and any other Basic
Documents to reflect such succession as Master Servicer pursuant to this Section
shall be paid by the predecessor Master Servicer upon presentation of reasonable
documentation of such costs and expenses. Upon receipt of notice of the
occurrence of a Master Servicer Default, the Eligible Lender Trustee shall give
notice thereof to the Rating Agencies.
Notwithstanding the termination of the Master Servicer and the
engagement of a successor Master Servicer, each Servicer shall continue to
serve in its capacity as Servicer or subservicer, unless it is in breach of the
related Servicing or Subservicing Agreement.
(b) Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(1) any failure by the Administrator to direct the
Indenture Trustee or the Eligible Lender Trustee, as applicable, to make any
required distributions from any of the Trust Accounts, which failure
continues unremedied for three Business Days after written notice of such
failure is received by the Administrator from the Indenture Trustee or
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the Eligible Lender Trustee or after discovery of such failure by an officer
of the Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of the
Administrator set forth in this Agreement, the Administration Agreement or
any other Basic Document, which failure shall (i) materially and adversely
affect the rights of Noteholders and (ii) continues unremedied for a period
of 60 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Administrator by
the Indenture Trustee or the Eligible Lender Trustee or (B) to the
Administrator and to the Indenture Trustee and the Eligible Lender Trustee by
the Noteholders representing not less than 25% of the Outstanding Amount of
the Notes;
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall
not have been remedied, the Indenture Trustee or the Noteholders evidencing not
less than 25% of the Outstanding Amount of the Notes, by notice then given in
writing to the Administrator (and to the Indenture Trustee and the Eligible
Lender Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Sections 6.3 and 7.2
hereof) of the Administrator under this Agreement and the Administration
Agreement. On or after the receipt by the Administrator of such written
notice, all authority and power of the Administrator under this Agreement and
the Administration Agreement, whether with respect to the Notes, the
Certificates or the Financed Student Loans or otherwise, shall, without further
action, pass to and be vested in the Indenture Trustee or such successor
Administrator as may be appointed under Section 8.2; and, without limitation,
the Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor
Administrator, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination. The
predecessor Administrator shall cooperate with the successor Administrator, the
Indenture Trustee and the Eligible Lender Trustee in effecting the termination
of the responsibilities and rights of the predecessor Administrator under this
Agreement and the Administration Agreement. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
and the Administration Agreement to reflect such succession as
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Administrator pursuant to this Section shall be paid by the predecessor
Administrator upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Administrator Default,
the Eligible Lender Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.2. Appointment of Successor. (a) Upon receipt by the
Master Servicer or the Administrator, as the case may be, of notice of
termination pursuant to Section 8.1, or the resignation by the Master Servicer
or the Administrator, as the case may be, in accordance with the terms of this
Agreement, the predecessor Master Servicer or the Administrator, as the case
may be, shall continue to perform its functions as Master Servicer or
Administrator, as the case may be, under this Agreement and the Administration
Agreement, as the case may be, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 120 days from the delivery to the
Eligible Lender Trustee and the Indenture Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Master
Servicer or Administrator, as the case may be, shall become unable to act as
Master Servicer or Administrator, as the case may be, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
termination hereunder of the Master Servicer or the Administrator, as the case
may be, the Issuer shall appoint a successor Master Servicer or Administrator,
as the case may be, acceptable to the Indenture Trustee, and the successor
Master Servicer or Administrator, as the case may be, shall accept its
appointment by a written assumption in form acceptable to the Indenture
Trustee. In the event that a successor Master Servicer or Administrator, as
the case may be, has not been appointed at the time when the predecessor Master
Servicer or Administrator, as the case may be, has ceased to act as Master
Servicer or Administrator, as the case may be, in accordance with this Section,
the Indenture Trustee without further action shall automatically be appointed
the successor Master Servicer or Administrator, as the
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case may be, and the Indenture Trustee shall be entitled to the Master Servicing
Fee or the Administration Fee, as the case may be in accordance with the
provisions of the Basic Documents. Notwithstanding the above, the Indenture
Trustee shall, if it shall be unwilling or legally unable so to act, appoint or
petition a court of competent jurisdiction to appoint, any established
institution whose regular business shall include the servicing of
student loans, as the successor to the Master Servicer or Administrator, as the
case may be, under this Agreement; provided, however, that such right to
appoint or to petition for the appointment of any such successor servicer shall
in no event relieve the Indenture Trustee from any obligations otherwise
imposed on it under the Basic Documents until such successor has in fact
assumed such appointment.
(b) Upon appointment, the successor Master Servicer or
Administrator, as the case may be (including the Indenture Trustee acting as
successor Master Servicer or Administrator as the case may be), shall be the
successor in all respects to the predecessor Master Servicer or Administrator,
as the case may be, and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Master Servicer or Administrator, as the case may be, and shall be entitled to
an amount agreed to by such successor Master Servicer or Administrator as the
case may be, in accordance with the provisions of the Basic Documents (which
shall not exceed the Master Servicing Fee or Administration Fee, as the case
may be, unless such compensation arrangements will not result in a downgrading
of the Notes by any Rating Agency) and all the rights granted to the
predecessor Master Servicer or Administrator, as the case may be, by the terms
and provisions of this Agreement.
(c) Neither the Master Servicer nor the Administrator may resign
unless it is prohibited from serving as such by law as evidenced by an Opinion
of Counsel to such effect delivered to the Indenture Trustee and the Eligible
Lender Trustee. Notwithstanding the foregoing or anything to the contrary
herein or in the other Basic Documents, the Indenture Trustee, to the extent it
is acting as successor Master Servicer or Administrator, as the case may be,
pursuant hereto shall be entitled to resign to the extent a qualified successor
Master Servicer or Administrator, as the case may be, has been appointed and
has assumed all the obligations of the Master Servicer or Administrator, as the
case may be, in accordance with the terms of this Agreement and the other Basic
Documents.
(d) Any successor Master Servicer shall assume all the obligations
and responsibilities of the Master Servicer under each Subservicing Agreement
with a Servicer and shall only be able to modify or terminate such Subservicing
Agreements pursuant to the provisions thereof.
SECTION 8.3. Notification to Noteholders and Certificateholders.
Upon any termination of, or appointment of a successor to, the Master Servicer
or Administrator, as the case may be, pursuant to this Article VIII, the
Eligible Lender Trustee shall give prompt written notice thereof to
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Certificateholders and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies (which, in the case of any such
appointment of a successor, shall consist of prior written notice thereof to
the Rating Agencies).
SECTION 8.4. Waiver of Past Defaults. The Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes may,
on behalf of all Noteholders and Certificateholders, waive in writing any
default by the Master Servicer or Administrator, as the case may be, in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required deposits to or payments from any of the Trust
Accounts (or giving instructions regarding the same) in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Master Servicer Default or Administrator Default, as the case
may be, arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE IX
Termination
SECTION 9.1. Termination. (a) Optional Purchase of All Financed
Student Loans. As of the last day of any Collection Period immediately
preceding a Distribution Date as of which the then outstanding Pool Balance is
5% or less of the Initial Pool Balance and the Outstanding Amount of the Fixed
Rate Notes has been reduced to zero, the Transferor shall have the option to
purchase the Indenture Trust Estate, other than the Trust Accounts; provided,
however, that unless Moody's agrees otherwise, the Transferor may not effect
any such purchase as long as the rating of its unsecured long-term debt
obligations is less than Baa3 by Moody's, unless the Eligible Lender Trustee
and the Indenture Trustee shall have received an Opinion of Counsel to the
effect that such purchase would not constitute a fraudulent conveyance. To
exercise such option, the Transferor shall deposit pursuant to Section 5.4 in
the Collection Account an amount equal to the aggregate Purchase Amount for the
Financed Student Loans and the related rights with respect thereto, plus the
appraised value of any such other property held by the Trust, such value to be
determined by an appraiser mutually agreed upon by the Transferor, the Eligible
Lender Trustee and the Indenture Trustee, and shall succeed to all interests in
and to the Trust; provided, however, that the Transferor may not effect such
purchase if the aggregate
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Purchase Amount to be so deposited in the Collection Account does not equal or
exceed an amount equal to the sum of (x) the unpaid principal balance of the
Notes plus accrued and unpaid interest thereon at the related Class Interest
Rate to the last day of the Collection Period during which such purchase occurs
and (y) the unpaid Transaction Fees, if any.
(b) Auction of Financed Student Loans. Any Financed Student
Loans remaining in the Trust as of the end of May 1, 2007 will be offered for
sale by the Indenture Trustee on or prior to the July 2007 Distribution Date.
The Transferor, its Affiliates and unrelated third parties may offer bids to
purchase such Financed Student Loans on or prior to such Distribution Date. If
at least two bids are received, the Indenture Trustee will accept the highest
bid equal to or in excess of the greater of (x) the aggregate Purchase Amounts
of such Financed Student Loans as of the end of the Collection Period
immediately preceding such Distribution Date or (y) an amount that would be
sufficient to (i) reduce the outstanding principal amount of the Notes on such
Distribution Date to zero and (ii) pay to the Noteholders the Noteholders'
Interest Distribution Amount payable on such Distribution Date and pay to the
Counterparties any Trust Swap Payments payable on such Distribution Date, if
any (the "Minimum Purchase Price"). If at least two bids are not received or
the highest bid is not equal to or in excess of the Minimum Purchase Price, the
Indenture Trustee will not consummate such sale. The proceeds of any such sale
will be used to redeem any outstanding Notes on such Distribution Date and pay
any Trust Swap Payments. The proceeds of any sale will be applied in the order
and priority set forth in 5.4(b) of the Indenture. If the sale is not
consummated in accordance with the foregoing, the Indenture Trustee may, but
shall not be under any obligation to, solicit bids to purchase the Financed
Student Loans on future Distribution Dates upon terms similar to those
described above.
(c) Insolvency of Transferor. Upon any sale of the assets of the
Trust pursuant to Section 9.2 of the Trust Agreement, the Master Servicer shall
instruct the Indenture Trustee to deposit the net proceeds from such sale after
all payments and reserves therefrom (including the expenses of such sale) have
been made (the "Insolvency Proceeds") in the Collection Account. On the
applicable Distribution Date, or, if such proceeds are not so deposited on a
Distribution Date, on the first Distribution Date following the date on which
the Insolvency Proceeds are deposited in the Collection Account, the Master
Servicer shall instruct the Indenture Trustee to make the following
distributions (after the application on such Distribution Date of the amount of
Available Funds and amounts on deposit in the Reserve Account pursuant to
Sections 5.5
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(other than pursuant to Section 5.5(a)(ii)) and 5.6) from the Insolvency
Proceeds and any funds remaining on deposit in the Reserve Account (including
the proceeds of any sale of investments therein as described in the following
sentence):
(i) to the Department, the Indenture Trustee and the Eligible Lender
Trustee, any unpaid Consolidation Loan Fees, Indenture Trustee Fees and any
unpaid Eligible Lender Trustee Fees, respectively, and other amounts owed the
Indenture Trustee or the Eligible Lender Trustee hereunder or under any other
Basic Document and not otherwise paid on such Distribution Date;
(ii) to each Class of Class A Noteholders and the Counterparties, pro
rata based upon the portion thereof allocable to each such Class and the
Counterparties, any portion of the Noteholders' Interest Distribution Amount
applicable to the Class A Noteholders and the Trust Swap Payment, if any,
allocable to the Counterparties, not otherwise distributed to such Class A
Noteholders and the Counterparties on such Distribution Date;
(iii) to each Class of Class A Noteholders, pro rata based upon the
Outstanding Amount of such Class (after giving effect to the reduction in the
Outstanding Amount of such Class resulting from the distributions to such
Class on such Distribution Date and on prior Distribution Dates) until the
Outstanding Amount of each Class of Class A Notes has been reduced to zero;
(iv) to the Class B Noteholders, any portion of the Noteholders' Interest
Distribution Amount applicable to the Class B Noteholders not otherwise
distributed to the Class B Noteholders on such Distribution Date;
(v) after the Outstanding Amount of the Class A Notes has been reduced to
zero, to the Class B Noteholders, the Outstanding Amount of the Class B Notes
(after giving effect to the reduction in the Outstanding Amount of the Notes
resulting from the distributions to Noteholders on such Distribution Date and
on prior Distribution Dates);
(vi) to the Master Servicer, any unpaid Servicing Fee and other amounts
owed to the Master Servicer hereunder or under any other Basic Document and
not otherwise paid on such Distribution Date;
(vii) to the Class A-8 Noteholders and the Class A-9 Noteholders, any
portion of the Noteholders' Interest Carryover applicable to any such Class
the respective Class
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of Class A Notes, pro rata based upon the portion thereof allocable to
each such Class not otherwise distributed to the Class A Noteholders on such
Distribution Date;
(viii) to the Class B Noteholders, any portion of the Noteholders'
Interest Carryover applicable to the Class B Noteholders not otherwise
distributed to the Class B Noteholders on such Distribution Date;
(ix) to the Counterparties, any portion of the Swap Termination
Payments, if any, not otherwise distributed to the Counterparties on such
Distribution Date.
(x) to the Certificateholders, any portion of the Certificateholders'
Interest Distribution amount not otherwise distributed to the
Certificateholders on such Distribution Date; and
(xi) to the Certificateholders, the Certificate Balance (after giving
effect to the reduction in the Certificate Balance to result from the
distributions to Certificateholders on such Distribution Date).
Any investments on deposit in the Reserve Account which will not mature on or
before the Distribution Date when needed shall be sold by the Indenture Trustee
at such time as will result in the Indenture Trustee receiving the proceeds
from such sale not later than the Business Day preceding such Distribution
Date. Any Insolvency Proceeds remaining after the deposits described above
shall be paid to the Transferor.
(d) Notice. Notice of any termination of the Trust shall be given
by the Administrator to the Master Servicer, the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies as soon as practicable after the
Administrator has received notice thereof.
(e) Succession. Following the satisfaction and discharge of the
Indenture and the payment in full of the principal of and interest on the
Notes, the Certificateholders will succeed to the rights of the Noteholders
hereunder other than Section 5.6(b) and the Eligible Lender Trustee will
succeed to the rights of, and assume the obligations of, the Indenture Trustee
pursuant to this Agreement and any other Basic Documents.
ARTICLE X
[Reserved]
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ARTICLE XI
Miscellaneous
SECTION 11.1. Amendment. (a) This Agreement may be amended by the
Transferor, the Master Servicer and the Eligible Lender Trustee, with the prior
consent of the Indenture Trustee (which consent shall not be unreasonably
withheld) to cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Eligible Lender Trustee and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the
Transferor, the Master Servicer and the Eligible Lender Trustee, with the prior
consent of the Indenture Trustee, the consent of the Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments with respect to
Financed Student Loans or distributions that shall be required to be made for
the benefit of the Noteholders, the Certificateholders or any Counterparty or
(b) reduce the aforesaid percentage of the Outstanding Amount of the Notes and
the Certificate Balance, the Noteholders and the Certificateholders of which are
required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders and the Counterparties affected
thereby.
(c) Promptly after the execution of any amendment pursuant to clause
(b) above, the Eligible Lender Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder and the
Indenture Trustee.
(d) It shall not be necessary for the consent of Certificateholders
or Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
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(e) Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee and the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 11.2(i)(1). The Eligible Lender Trustee and the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Eligible Lender Trustee's or the Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
Notwithstanding anything to the contrary contained in this Section 11.1,
neither this Agreement nor the Indenture may be amended unless such amendment
satisfies the Rating Agency Condition.
SECTION 11.2. Protection of Interests in Trust. (a) The Transferor
shall execute and file such financing statements and cause to be executed and
filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain, and protect the interest of
the Issuer, the Eligible Lender Trustee and the Indenture Trustee in the
Financed Student Loans and in the proceeds thereof. The Transferor shall
deliver (or cause to be delivered) to the Eligible Lender Trustee and the
Indenture Trustee file- stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither the Transferor nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Eligible Lender Trustee and
the Indenture Trustee at least five days' prior written notice thereof and
shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) Each of the Transferor and the Master Servicer shall have an
obligation to give the Eligible Lender Trustee and the Indenture Trustee at
least 30 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment. The Master Servicer shall at all times
maintain each office from
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which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.
(d) The Master Servicer shall maintain, or cause the Servicers to
maintain, accounts and records as to each Financed Student Loan for which it is
the Primary Servicer (or provide access to such accounts and records being
serviced by a Servicer) accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Financed Student Loan,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with
respect to) each Financed Student Loan and the amounts from time to time
deposited in the Collection Account in respect of such Financed Student Loan.
(e) The Master Servicer shall cause each Subcustodian to maintain
its computer systems so that, from and after the time of transfer under this
Agreement of the Financed Student Loans, each Subcustodian's master computer
records (including any backup archives) that refer to a Financed Student Loan
shall indicate clearly the interest of the Issuer and the Indenture Trustee in
such Financed Student Loan and that such Financed Student Loan has been
assigned by the Transferor to the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and the Indenture Trustee's interest in a
Financed Student Loan shall be deleted from or modified on the applicable
Subcustodian's computer systems when, and only when, the related Financed
Student Loan shall have been paid in full or repurchased.
(f) If at any time the Transferor shall propose to contribute, grant
a security interest in, or otherwise transfer any interest in Financed Student
Loans to any prospective purchaser, lender or other transferee, the Master
Servicer shall give notice to such prospective purchaser, lender or other
transferee that such Financed Student Loan has been assigned to the Issuer and
has been pledged to the Indenture Trustee.
(g) Upon reasonable notice, the Master Servicer shall permit the
Indenture Trustee and its agents once each calendar year (unless there is a
Servicer Default, in which case at any time) during normal business hours to
inspect, audit and make copies of and abstracts from the Master Servicer's
records regarding any Financed Student Loan.
(h) Upon request at any time the Eligible Lender Trustee or the
Indenture Trustee shall have reasonable grounds to believe that such request
would be necessary in connection with its performance of its duties under the
Basic Documents,
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the Master Servicer shall furnish to the Eligible Lender Trustee or to the
Indenture Trustee, within twenty Business Days, a list of all Financed Student
Loans (by borrower social security number and date of issuance) then held as
part of the Trust, and a comparison of such list to the list of the Initial
Financed Student Loans set forth in Schedule A as of the Closing Date, and, for
each Financed Student Loan that has been added to or removed from the pool of
loans held by the Eligible Lender Trustee on behalf of the Issuer, information
as to the date as of which and circumstances under which each such Financed
Student Loan was so added or removed.
(i) The Transferor shall deliver to the Eligible Lender Trustee and
the Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Eligible Lender Trustee and the
Indenture Trustee in the Financed Student Loans, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three months
after the Closing Date, an Opinion of Counsel, dated as of a date during such
120-day period, either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Eligible
Lender Trustee and the Indenture Trustee in the Financed Student Loans, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) stating that, in the opinion
of such counsel, no such action shall be necessary to preserve and protect
such interest; provided that a single Opinion of Counsel may be delivered in
satisfaction of the foregoing requirement and that of Section 3.6 of the
Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify (as of the date of such opinion and given all applicable laws as in
effect on such date) any action
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necessary to be taken in the following year to preserve and protect such
interest.
(j) The Administrator shall file all reports with respect to the
Notes and the Certificates as may be required by the Commission or state
securities authorities.
SECTION 11.3. Notices. All demands, notices and communications upon
or to the Transferor, the Master Servicer, the Administrator, the Eligible
Lender Trustee or the Indenture Trustee under this Agreement shall be in
writing, personally delivered or mailed by certified mail or overnight courier,
return receipt requested or overnight courier (or in the form of telex or
facsimile notice, followed by written notice delivered as aforesaid) and shall
be deemed to have been duly given upon receipt (a) in the case of the
Transferor, the Master Servicer or Administrator, two copies, one to PNC Bank,
National Association, 2600 Liberty Avenue, Suite 200, Pittsburgh, Pennsylvania
15222, Attention: John Peters; facsimile: (800) 300-2213, with a copy to PNC
Bank, National Association, One PNC Plaza, 249 Fifth Avenue, Pittsburgh,
Pennsylvania 15222, Attention: Helen Pudlin, Esq.; Senior Vice President and
General Counsel; facsimile (412) 762-5920 (b) in the case of the Issuer or the
Eligible Lender Trustee, at the Corporate Trust Office of the Eligible Lender
Trustee, (c) in the case of the Indenture Trustee, at its Corporate Trust
Office; (d) in the case of Moody's, to Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Structured Finance
Department / Student Loans (telephone: (212) 553 0300; facsimile: (212) 553
4792), (e) in the case of Standard & Poor's, to Standard & Poor's Ratings
Service, 25 Broadway (20th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department (telephone: (212) 208 8000; facsimile: (212) 412
0225), (f) in the case of Fitch, to Fitch Investors Services, L.P., One State
Street Plaza, New York, New York 10004, Attention: Municipal Structured Finance
Group (telephone: (212) 908-0500 facsimile: (212) 480-4421) or, as to each of
the foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.12 and in Section 6.5 and as
provided in the provisions of this Agreement concerning the resignation of the
Master Servicer, this Agreement may not be assigned by the Transferor or the
Master Servicer. This Agreement may only be assigned by the Eligible Lender
Trustee to its permitted successor pursuant to the Trust Agreement.
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SECTION 11.5. Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Transferor, the Master
Servicer, the Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee and the Noteholders as third party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy
or claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.9. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.10. Assignment to Indenture Trustee. The Transferor
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
by the Issuer to the Indenture Trustee pursuant to the Indenture for the
benefit of the Noteholders of a security interest in all right, title and
interest of the Issuer in, to and under the Financed Student Loans and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to
the Indenture Trustee.
SECTION 11.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Master Servicer, the Administrator and the
Transferor shall not, prior to the date that is one year after the termination
of this
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Agreement, with respect to the Issuer acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
under any Federal or state bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 11.12. Limitation of Liability of Eligible Lender Trustee
and Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by The First National Bank of Chicago
not in its individual capacity but solely in its capacity as Eligible Lender
Trustee of the Issuer and in no event shall The First National Bank of Chicago
in its individual capacity or as beneficial owner of the Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto as to all of which recourse shall be had
solely to the assets of the Issuer.
Notwithstanding any provision in this Agreement or the Basic
Documents, nothing in such Agreement and Basic Documents shall be construed to
limit the Eligible Lender Trustee's responsibility to the U.S. Secretary of
Education or a Guarantor in its capacity as Eligible Lender Trustee for any
violations of statutory or regulatory requirements that may occur with respect
to loans held in the Trust, pursuant to 34 CFR 682.203(b) or any successor
provision thereto.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as Eligible
Lender Trustee on behalf of the
Trust
By: /s/ Steve M. Husbands
----------------------
Name: Steve M. Husbands
Title: Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION
Transferor, Master Servicer
and Administrator
By: /s/ Bryan W. Ridley
-----------------------
Name: Bryan W. Ridley
Title: Senior Vice President
Acknowledged and accepted
as of the day and year
first above written:
BANKERS TRUST COMPANY, not
in its individual capacity
but solely as Indenture Trustee
By: /s/ Linda A. Rakolta
----------------------
Name: Linda A. Rakolta
Title: Vice President
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APPENDIX A
TO THE
TRANSFER AND SERVICING AGREEMENT
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby
and in any certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Appendix or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Appendix or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of such instrument. To
the extent that the definitions of accounting terms in this Appendix or in any
such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Appendix or in any such instrument, certificate
or other document shall control.
(c) The words "hereof", "herein", "hereunder" and words
of similar import when used in an instrument refer to such instrument as a
whole and not to any particular provision or subdivision thereof; references in
an instrument to "Article", "Section" or another subdivision or to an
attachment are, unless the context otherwise requires, to an article, section
or subdivision of or an attachment to such instrument; and the term "including"
means "including without limitation".
(d) The definitions contained in this Appendix are
equally applicable to both the singular and plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or
referred to below or in any agreement or instrument that is
<PAGE> 79
governed by this Appendix means such agreement or instrument or statute as from
time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes)
by succession of comparable successor statutes and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted
successors and assigns.
Definitions
"Act" has the meaning specified in Section 11.3(a) of the
Indenture.
"Adjustment Payments" has the meaning set forth in Section
2.3(e) of the Transfer and Servicing Agreement.
"Administration Agreement" means the Administration Agreement
dated as of March 27, 1997, among the Issuer, the Indenture Trustee and the
Administrator, as amended from time to time.
"Administration Fee" has the meaning specified in Section 3
of the Administration Agreement.
"Administrator" means PNC Bank, National Association, in its
capacity as administrator of the Issuer and the Financed Student Loans, or any
successor as Administrator under the Transfer and Servicing Agreement.
"Administrator Default" has the meaning specified in Section
8.1(b) of the Transfer and Servicing Agreement.
"Administrator's Certificate" means an Officer's Certificate
of the Administrator delivered pursuant to Section 4.7 of the Transfer and
Servicing Agreement, substantially in the form of Exhibit C thereto and as the
Administrator and the Indenture Trustee may agree.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"AFSA" means the AFSA Data Corporation.
"Authenticating Agent" means the Person appointed by the
Indenture Trustee at the request of the Issuer as Authenticating Agent for the
Notes pursuant to Section 2.3(8) of the Indenture, and any successor
Authenticating Agent for the Notes.
"Authorized Officer" means (i) with respect to the Issuer,
any officer of the Eligible Lender Trustee who is authorized to act for the
Eligible Lender Trustee in matters relating to the Issuer pursuant to the Basic
Documents and who is identified on the list of Authorized Officers delivered by
the Eligible Lender Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter), (ii)
with respect to the Administrator, any officer of the Administrator who is
authorized to act for the Administrator in matters relating to itself or to the
Issuer and to be acted upon by the Administrator pursuant to the Basic
Documents and who is identified on the list of Authorized Officers delivered by
the Administrator to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter), (iii) with
respect to the Transferor, any officer of the Transferor who is authorized to
act for the Transferor in matters relating to or to be acted upon by the
Transferor pursuant to the Basic Documents and who is identified on the list of
Authorized Officers delivered by the Transferor to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to
time thereafter) and (iv) with respect to a Servicer, any officer of such
Servicer who is authorized to act for such Servicer in matters relating to or
to be acted upon by such Servicer pursuant to the Basic Documents and who is
identified on the list of Authorized Officers delivered by such Servicer to the
Indenture Trustee, on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Available Funds" means, with respect to any Collection
Period, the excess of (A) the sum, without duplication, of the following
amounts with respect to such Collection Period: (i) all collections received by
the Master Servicer or any Servicer on the Financed Student Loans (including
any Guarantee Payments received with respect to the Financed Student Loans)
during such Collection Period; (ii) any payments, including without limitation
Interest Subsidy Payments and Special Allowance Payments, received by the
Eligible Lender Trustee during such Collection Period with respect to Financed
Student Loans; (iii) all proceeds from any sales of Financed Student Loans by
the
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Trust during such Collection Period; (iv) any payments of or with respect
to interest received by the Master Servicer or a Servicer during such
Collection Period with respect to a Financed Student Loan for which a Realized
Loss was previously allocated; (v) the aggregate Purchase Amounts received for
those Financed Students Loans purchased by the Transferor or purchased by the
Master Servicer under an obligation which arose during the related Collection
Period; (vi) the aggregate amounts, if any, received from the Transferor or the
Master Servicer, as the case may be, as reimbursement of non-guaranteed
interest amounts, lost Interest Subsidy Payments and Special Allowance
Payments, with respect to the Financed Student Loans pursuant to Section 3.2 or
Section 4.5, respectively, of the Transfer and Servicing Agreement (vii) all
Adjustment Payments, if any, received from the Transferor during such
Collection Period and (viii) Investments Earnings for such Collection Period
over (B) the Issuer Consolidation Payments for such Collection Period;
provided, however, that Available Funds will exclude all payments and proceeds
of any Financed Student Loans the Purchase Amount of which has been included in
Available Funds for a prior Collection Period, which payments and proceeds
shall be paid to the Transferor, and amounts used to reimburse the Master
Servicer for Monthly Advances pursuant to Section 5.4 of the Transfer and
Servicing Agreement. For any Distribution Date the term Available Funds also
includes any Counterparty Swap Payments received with respect to such
Distribution Date.
"Basic Documents" means the Trust Agreement, the Master
Indenture, the Terms Supplement, the Transfer and Servicing Agreement, the
Administration Agreement, the Note Depository Agreement, the Guarantee
Agreements, the Underwriting Agreement and other documents and certificates
delivered in connection with any thereof and all amendments and supplements
thereto.
"Benefit Plan" means any employee benefit plan, retirement
arrangement, individual retirement account or Keogh Plan subject to either
Title I of ERISA or Section 4975 of the Code, or any entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of a plan's investment in the entity.
"Book-Entry Note" means a beneficial interest in the Notes,
ownership and transfers of which shall be through book entries by a Securities
Depository as described in Section 2.14 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which national banking associations or banking
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institutions or trust companies in New York are authorized or obligated by law,
regulation or executive order to remain closed.
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A to the Trust Agreement.
"Certificate Balance" equals, initially, the Initial
Certificate Balance and, thereafter, equals the Initial Certificate Balance
reduced by all amounts previously distributed to Certificateholders as
principal. In determining whether the Certificateholders which hold
Certificates representing the requisite Certificate Balance have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or under any other Basic Document, the Certificate Balance shall not include
the principal balance of Certificates owned by the Transferor or any Affiliate
of the Transferor.
"Certificate Distribution Account" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Transfer and Servicing Agreement.
"Certificate Monthly Advance Account" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Transfer and Servicing Agreement.
"Certificate Paying Agent" means any paying agent or
co-paying agent appointed pursuant to Section 3.10 of the Trust Agreement,
which shall initially be the Eligible Lender Trustee.
"Certificate Initial Rate" means 7.1875% per annum.
"Certificate Rate" means One-Month LIBOR plus 1.50%.
"Certificate Register" and "Certificate Registrar" means the
register mentioned and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificateholder" means a Person in whose name a
Certificate is registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, with respect
to any Distribution Date, the Certificateholders# Interest Distribution Amount
for such Distribution Date plus, for each Distribution Date on and after the
Notes have been paid in full, the Certificateholders' Principal Distribution
Amount for such Distribution Date.
"Certificateholders' Interest Carryover Shortfall"
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means, with respect to any Quarterly Distribution Date, the excess, if any, of
(i) the sum of the related Certificateholders' Interest Distribution Amount on
the preceding Quarterly Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Quarterly
Distribution Date over (ii) the amount of interest actually distributed to such
Certificateholders on such preceding Quarterly Distribution Date, plus interest
on the amount of such excess interest due to such Certificateholders, to the
extent permitted by law, at the related Certificate Rate from such preceding
Quarterly Distribution Date to the current Quarterly Distribution Date.
"Certificateholders' Interest Distribution Amount" means,
with respect to Quarterly Distribution Date, the sum of (i) the amount of
interest accrued at One-Month LIBOR plus 1.50% per annum for each related
Interest Period since the last Quarterly Distribution Date on the outstanding
Certificate Balance on the immediately preceding Quarterly Distribution Date,
after giving effect to all distributions of principal to Certificateholders on
such Quarterly Distribution Date (or, in the case of the first Quarterly
Distribution Date, on the Closing Date) and (ii) the Certificateholders'
Interest Carryover Shortfall for such Quarterly Distribution Date.
"Certificateholders' Principal Carryover Shortfall" means, as
of the close of Quarterly Distribution Date on or after which the Notes have
been paid in full, the excess, if any, of (i) the sum of the
Certificateholders' Principal Distribution Amount on such Quarterly
Distribution Date and any outstanding Certificateholders' Principal Carryover
Shortfall for the preceding Quarterly Distribution Date over (ii) the amount of
principal actually distributed to the Certificateholders on such Quarterly
Distribution Date.
"Certificateholders' Principal Distribution Amount" means, on
each Quarterly Distribution Date on and after the date when the principal
balance of each Class of Notes has been paid in full, the sum of (a) the
Principal Distribution Amount for the three Collection Periods preceding such
Quarterly Distribution Date and (b) the Certificateholders' Principal Carryover
Shortfall as of the close of the preceding Quarterly Distribution Date;
provided, however, that the Certificateholders' Principal Distribution Amount
will in no event exceed the outstanding principal balance of the Certificates.
Further, on the first Quarterly Distribution Date occurring on or after the
Quarterly Distribution Date on which the principal balance of the last
Outstanding Class of Notes is paid in full, the Certificateholders' Principal
Distribution Amount also will
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include the excess, if any, of the amount of principal available to be
distributed on such Quarterly Distribution Date over the amount of principal
paid on the Notes on such date.
"Class" means any class of Notes.
"Class A Notes" means the Class A-1, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class A-7 Notes,
Class A-8 Notes and the Class A-9 Notes.
"Class A-1 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-1 Asset
Backed Notes."
"Class A-1 Noteholder" means any Noteholder of the Class A-1
Notes.
"Class A-2 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-2 Asset
Backed Notes."
"Class A-2 Noteholder" means any Noteholder of the Class A-2
Notes.
"Class A-3 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-3 Asset
Backed Notes."
"Class A-3 Noteholder" means any Noteholder of the Class A-3
Notes.
"Class A-4 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-4 Asset
Backed Notes."
"Class A-4 Noteholder" means any Noteholder of the Class A-4
Notes.
"Class A-5 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-5 Asset
Backed Notes."
"Class A-5 Noteholder" means any Noteholder of the Class A-5
Notes.
"Class A-6 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-6 Asset
Backed Notes."
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"Class A-6 Noteholder" means any Noteholder of the Class A-6
Notes.
"Class A-7 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior Fixed Rate Class A-7 Asset
Backed Notes."
"Class A-7 Noteholder" means any Noteholder of the Class A-7
Notes.
"Class A-8 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-8 Asset
Backed Notes."
"Class A-8 Noteholder" means any Noteholder of the Class A-8
Notes.
"Class A-9 Notes" means Notes of the Issuer designated as
"PNC Student Loan Trust I, Series 1997-2, Senior LIBOR Rate Class A-9 Asset
Backed Notes."
"Class A-9 Noteholder" means any Noteholder of the Class A-9
Notes.
"Class B Notes" means Notes of the Issuer designated as "PNC
Student Loan Trust I, Series 1997-2, Subordinate LIBOR Rate Class B Asset
Backed Notes."
"Class B Noteholder" means any Noteholder of the Class B
Notes.
"Class Initial Rate" means, with respect to any Class of
Notes, the rate identified as such in the Terms Supplement.
"Class Interest Rate" means, with respect to any Class of
Notes, the interest rate determined as set forth in the Terms Supplement.
"Closing Date" means June 25, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
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<PAGE> 86
"Collection Period" means, initially, with respect to each of
the Initial Financed Student Loans, the period beginning on the day immediately
succeeding the applicable Cut-off Date and ending on June 30, 1997, inclusive,
and thereafter, the Collection Period means the calendar month immediately
following the end of the previous Collection Period.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loan" means a Federal Loan designated as such,
made by the Transferor to an eligible borrower that represents the refinancing
of student loans to such borrower and his or her spouse in accordance with the
applicable terms and provisions of the Higher Education Act.
"Consolidation Loan Fees" means, as to any Collection Period,
an amount accrued during such Collection Period equal to 1.05% per annum of the
average outstanding principal balance of the Consolidation Loans owned by the
Trust during such Collection Period.
"Consolidation Prepayments" means, on any Exchange Date, the
amount of principal then on deposit in the Collection Account representing
payments received as a result of Financed Student Loans being repaid with the
proceeds of consolidation loans (provided, however, if an Exchange Date occurs
during the month of a Distribution Date, Consolidation Prepayments shall not
include amounts received during the month of such Distribution Date).
"Corporate Trust Office" means (i) with respect to the
Indenture Trustee, the principal office of the Indenture Trustee at which at
any particular time its corporate trust business shall be administered, which
office on the Closing Date is located at Four Albany Street, New York, New York
10006 Attention: Corporate Trust and Agency Group, Structured Finance Group
(telephone: (212) 250- 6652; facsimile: (212) 250-6439) or at such other
address as the Indenture Trustee may designate from time to time by notice to
the Noteholders, the Certificateholder and the Transferor, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and the Transferor)
and (ii) with respect to the Eligible Lender Trustee, the principal corporate
trust office of the Eligible Lender Trustee located at One First National
Plaza, Suite 0126, Chicago, Illinois 60670, Attention: Steven Husbands
telephone: (312) 407-1892; facsimile (312) 407-1708;] or at such other address
as the Eligible Lender Trustee may designate by notice to the
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<PAGE> 87
Certificateholders and the Transferor, or the principal corporate trust office
of any successor Eligible Lender Trustee (the address of which the successor
Eligible Lender Trustee will notify the Certificateholders and the Transferor).
"Counterparty" means any Person who from time to time is a
party to a Swap Agreement with the Trust, which Persons are initially Deutsche
Bank AG, New York Branch and Morgan Guaranty Trust Company of New York.
"Counterparty Swap Payment" means, as to the Swap Agreements,
with respect to any Quarterly Distribution Date, the excess, if any, of (i) the
aggregate of the amounts accrued during the three Interest Periods immediately
preceding such Quarterly Distribution Date (or, in the case of the first
Quarterly Distribution Date, since the Closing Date) on the Notional Amount of
the Swap Agreements at the fixed rates set forth therein (calculated on the
basis of a year consisting of 12 months of 30 days each) over (ii) the aggregate
amounts payable under the Swap Agreements on such Quarterly Distribution Date by
the Trust to the Counterparties.
"Cut-off Date" means for the Financed Student Loans set forth
on (i) Schedule A-1 to the Transfer and Servicing Agreement, the close of
business on June 6, 1997 and (ii) Schedule A-2 to the Transfer and Servicing
Agreement, the close of business on June 17, 1997.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Deferral Phase" means the period during which the related
borrower is in school and for certain authorized periods as described in the
Higher Education Act.
"Definitive Notes" has the meaning specified in Section 2.14
of the Indenture.
"Delivery" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to,
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or registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313) of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles
8 and 9 of the
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UCC: book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Indenture Trustee or
its nominee or custodian and indicating that such custodian holds such
Trust Account Property solely as agent for the Indenture Trustee or its
nominee or custodian; and such additional or alternative procedures as
may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee
or its nominee or custodian, consistent with changes in applicable law
or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property
that is an uncertificated security under Article 8 of the UCC and that
is not governed by clause (b) above, registration on the books and
records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Indenture Trustee
or its nominee or custodian.
"Department" means the United States Department of Education,
an agency of the Federal government.
"Depositor" means PNC Bank, National Association in its
capacity as Depositor under the Trust Agreement.
"Determination Date" means, with respect to any Distribution
Date, the fifth Business Day preceding such Distribution Date.
"Distribution" means, with respect to any Financed Student
Loan, the amount of the monthly remittance payable to the holder of such
Financed Student Loan in accordance with its terms.
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<PAGE> 90
"Distribution Date" means the 25th day of each January,
April, July and October (or in the case of the Class A-1 Notes, monthly on the
25th day of each month and on July 20, 1998), or if any such day is not a
Business Day, the next succeeding Business Day, in each case commencing July
25, 1997.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the States (or any domestic
branch of a foreign bank), having corporate trust powers and acting as trustee
for funds deposited in such account, so long as any of the securities of such
depository institution have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade. An Eligible
Deposit Account may not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" means an entity which is an
institution whose deposits are insured by the FDIC and the unsecured and
uncollateralized long-term debt obligations of which shall be rated "AA-" or
better by Standard & Poor's, A2 or better by Moody's, and if rated by Fitch,
"AA" or better by Fitch, or the highest short-term rating by Standard & Poor's,
the highest short term rating by Moody's and if rated by Fitch, the highest
short term rating by Fitch, and which is either (i)#a federal savings
association duly organized, validly existing and in good standing under the
federal banking laws, (ii)#an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii)#a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, or (iv)#a principal subsidiary of a
bank holding company.
"Eligible Investments" As used herein, Eligible Investments
shall include the following:
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation);
(2) Direct obligations of (including obligations issued or held
in book entry form on the books of) the Department of the
Treasury of the United States of America;
(3) obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United
States of America, including:
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- Export-Import Bank
- Farm Credit System Financial Assistance Corporation
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development (PHA's)
- Federal Housing Administration;
(4) senior debt obligations rated "AAA" by Standard & Poor's,
"Aaa" by Moody's and if rated by Fitch, "AAA" by Fitch issued
by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation
(5) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which
have a rating on their short term certificates of deposit on
the date of purchase of "A-1+" by Standard & Poor's, "P-1" by
Moody's and if rated by Fitch, "F-1+" by Fitch and maturing
no more than 360 days after the date of purchase (ratings on
holding companies not being considered the rating of the
bank);
(6) commercial paper which is rated at the time of purchase in
the single highest classification, "A-1+" by Standard &
Poor's, "P-1" by Moody's and if rated by Fitch, "F-1+" by
Fitch and which matures not more than 270 days after the date
of purchase;
(7) Investments in money market funds (including, but not limited
to, money market mutual funds) rated "AAAm" or "AAAm-G" or
better by Standard & Poor's and if rated by Fitch, "AAA" by
Fitch;
(8) investment agreements acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment; and
(9) other forms of investments acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment.
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Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, for so long as the Transferor is a Certificateholder, all
investments of the Trust shall be made in investments permissible for a
national bank.
The value of the above investments shall be determined as follows:
a) as to investments the bid and asked prices of which are
published on a regular basis in The Wall Street Journal (or,
if not there, then in The New York Times): the average of the
bid and asked prices for such investments so published on or
most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not
published on a regular basis in The Wall Street Journal or
The New York Times: the average bid price at such time of
determination for such investments by any two nationally
recognized government securities dealers (selected by the
Indenture Trustee in its absolute discretion) at the time
making a market in such investments or the bid price
published by a nationally recognized pricing service;
c) as to certificates of deposit and bankers acceptances: the
face amount thereof, plus accrued interest; and
d) as to any investment not specified above: the value thereof
established by prior agreement between the Issuer, the
Administrator and the Indenture Trustee.
"Eligible Lender Trustee" means The First National Bank of
Chicago not in its individual capacity but solely as Eligible Lender Trustee
under the Trust Agreement, and its successors and assigns in such capacity.
"Eligible Lender Trustee Fee" has the meaning specified in
Section 8.1 of the Trust Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" has the meaning specified in Section 5.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exchange Date" means, with respect to any Exchanged Student
Loans, the date specified as such in the related Transfer Agreement.
"Exchange Period" means the period commencing on the Closing
Date and ending on June 30, 2002.
"Exchanged Student Loan" means any Federal Loan transferred
to the Eligible Lender Trustee on behalf of the Issuer during the Exchange
Period pursuant to Section 2.2 of the Transfer and Servicing Agreement.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary, the Controller or the Treasurer of such corporation;
and with respect to any partnership, any general partner thereof.
"Expense Account" means the account designated as such
pursuant to Section 5.1 of the Transfer and Servicing Agreement.
"Expenses" means any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and
expenses) of any kind and nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Eligible Lender Trustee or any of its
officers, directors or agents in any way relating to or arising out of the
Trust Agreement, the other Basic Documents, the Trust Estate, the
administration of the Trust Estate or the action or inaction of the Eligible
Lender Trustee under the Trust Agreement or the other Basic Documents.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means, for any date of determination,
the Federal funds (effective) rate as published on page 118 of the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices) on the immediately
preceding Business Day. If no such rate is published on such page on such day,
"Federal Funds Rate" shall mean for any date of determination, the Federal
funds (effective) rate as published by the Federal Reserve Board in the most
recent edition of Federal Reserve Statistical Release No. H.15 (519) that is
available on the Business Day immediately preceding such date.
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"Federal Loan" means a student loan which is a PLUS Loan, SLS
Loan, Consolidation Loan, Stafford Loan or Unsubsidized Stafford Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under
Title#III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
"Final Maturity Date" means, with respect to any Note, the
date on which the entire unpaid principal amount of such Note becomes due and
payable as provided in the Terms Supplement.
"Financed Student Loan" means the Federal Loans set forth in
Schedule A-1 and Schedule A-2 to the Transfer and Servicing Agreement and
Schedule A to each Transfer Agreement, as amended or supplemented from time to
time by the Master Servicer to accurately reflect the Financed Student Loans
then subject to the Lien of the Indenture. The Schedule of Financed Student
Loans may be in the form of microfiche or other form of electronic media.
"Financed Student Loan Files" means the documents
specified in Section 3.3 of the Transfer and Servicing Agreement.
"Fitch" means Fitch Investors Service, LP.
"Fixed Rate Notes" means the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class A-7 Notes.
"FNMA" means Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
"Grace Period" means certain grace periods authorized by the
Higher Education Act during which the related borrower's scheduled payments are
deferred.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect
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<PAGE> 95
of the Trust Estate and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guarantee Agreements" means each agreement entered into
between the Eligible Lender Trustee and a Guarantor pursuant to which such
Guarantor guarantees payments on Financed Student Loans.
"Guarantee Payment" means any payment made by a Guaranty
Agency pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"Guarantor" means the Department, the California Student Aid
Commission, an agency of the State of California, the Florida Department of
Education, an agency of the State of Florida, the Georgia Higher Education
Assistance Corporation, a public non-profit corporation, Great Lakes Higher
Education Corporation, a public non-profit corporation, the Illinois Student
Assistance Commission, an agency of the State of Illinois, the Kentucky Higher
Education Assistance Authority, an agency of the Commonwealth of Kentucky, the
Michigan Higher Education Assistance Authority, an autonomous agency of the
Michigan Department of the Treasury, the New Jersey Higher Education Assistance
Authority, an agency of the State of New Jersey, the New Mexico Student Loan
Guarantee Corporation, a New Mexico non-profit corporation, PHEAA and United
States Aid Funds, Inc. a Delaware non-profit corporation and their respective
successors and assigns.
"Guaranty Agency" means any agency which has an agreement
with the Department of Education to be a guarantor of Federal Loans.
"Higher Education Act" means the Higher Education Act of
1965, as amended, together with any rules, regulations and interpretations
thereunder.
"Indenture" means the Master Indenture and the Terms
Supplement, each as amended or supplemented from time to time.
"Indenture Trust Estate" means all money, instruments, rights
and other property that are, from time to time, subject or intended to be
subject to the Lien and security interest of the Indenture for the benefit of
the Noteholders (including all
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<PAGE> 96
property and interests Granted to the Indenture Trustee), including all
proceeds thereof.
"Indenture Trustee" means Bankers Trust Company, not in its
individual capacity but solely as Indenture Trustee under the Indenture and its
successors and assigns in such capacity.
"Indenture Trustee Fee" has the meaning specified in Section
6.7 of the Master Indenture, as may be amended pursuant to any amendment to the
Terms Supplement.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Transferor and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Transferor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Transferor or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to
be delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Master Indenture, made by an Independent appraiser or other expert appointed by
an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" and that the signer is Independent
within the meaning thereof.
"Individual Note" means a Note of an initial principal amount
equal to $50,000. A Note of an original principal amount in excess thereof
shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such initial principal amount by $50,000, without regard
to fractions.
"Initial Financed Student Loans" has the meaning specified in
Section 2.1 of the Transfer and Servicing Agreement.
"Initial Certificate Balance" means $1,000, representing the
Certificate Balance as of the Closing Date
"Initial Pool Balance" means $1,014,231,891, representing the
sum of Pool Balance for the Initial Financed Student Loans set forth on
Schedule A-1 as of the applicable Cut-
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off Date and the Pool Balance for the Initial Financed Student Loans set forth
in Schedule A-2 as of the applicable Cut-off Date.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction
in the premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable Federal or State
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such Person's affairs,
and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Federal or State bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of
an order for relief in an involuntary case under any such law, or the consent
by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure
by such Person generally to pay its debts as such debts become due, or the
taking of action by such Person in furtherance of any of the foregoing.
"Institution of Higher Education" means an institution of
higher education as defined under the Higher Education Act (20 U.S.C.A.
##1085(b)).
"Interest Period" has the meaning set forth in the Terms
Supplement.
"Interest Subsidy Payments" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on
amounts on deposit in the Trust Accounts to be deposited into the Collection
Account on or prior to such Distribution Date pursuant to Section 5.1(b) of the
Transfer and Servicing Agreement.
"Issuer" means PNC Student Loan Trust I.
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"Issuer Consolidation Payments" has the meaning set forth in
Section 2.3(f) of the Transfer and Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LIBOR Determination Date" means, with respect to any Class
of Notes or the Certificates for which One-Month LIBOR is being determined
other than for the Initial Period, the applicable Rate Determination Date,
which must be a Business Day and London Banking Day.
"LIBOR Rate" means, with respect to the LIBOR Rate Notes or
the Certificates, the related Class Interest Rate or Certificate Rate, as the
case may be, that results from a determination based on One-Month LIBOR and is
determined as described in the Terms Supplement, the Transfer and Servicing
Agreement or the Trust Agreement, as the case may be.
"LIBOR Rate Notes" means the Class A-1 Notes, the Class A-8
Notes, the Class A-9 Notes and the Class B Notes.
"LIBOR Rate Determination Date" has the meaning set forth in
the Terms Supplement.
"Lien" means a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens and any other liens, if
any, which attach to the respective Financed Student Loan by operation of law
as a result of any act or omission by the related Obligor or obligations under
Subservicing Agreements in effect as of the Closing Date.
"London Banking Day" means any Business Day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
"Majority Certificateholder" means the holders of more than
50% of the Certificate Balance of the Certificates without regard to the
Certificates held by the Depositor.
"Master Indenture" means the Indenture dated as of March 27,
1997 and amended on the Closing Date between the Issuer and the Indenture
Trustee, as further amended or supplemented from time to time.
"Master Servicer" means PNC Bank, National Association, and
its permitted successors and assigns, as Master Servicer of
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<PAGE> 99
the Financed Student Loans under the Transfer and Servicing Agreement.
"Master Servicer Default" means an event specified in
Section 8.1(a) of the related Transfer and Servicing Agreement or Supplemental
Transfer and Servicing Agreement.
"Minimum Purchase Price" has the meaning set forth in Section
9.1(b) of the Transfer and Servicing Agreement.
"Monthly Advance" means the amount, if any, advanced by the
Master Servicer pursuant to Section 5.10 of the Transfer and Servicing
Agreement with respect to Guarantee Payments or Interest Subsidy Payments
applied for but not received as of the end of the Collection Period immediately
preceding the date such Monthly Advance is made.
"Monthly Advance Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Loan Rate" shall have the meaning set forth in the Terms
Supplement.
"Notes" means the notes issued by the Issuer pursuant to the
Master Indenture and the Terms Supplement.
"Note Depository Agreement" means the agreement dated as of
the Closing Date relating to the Notes among the Issuer, the Indenture Trustee,
the Administrator and the Depository Trust Company, as the initial Securities
Depository.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Note Owner" means, with respect to a Book Entry Note, the
Person who is the owner of such Book Entry Note, as reflected on the books of
the Securities Depository, or on the books of a Person maintaining an account
with such Securities Depository (directly as Securities Depository Participant
or as an indirect participant, in each case in accordance with the rules of
such Securities Depository).
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.6 of the Indenture.
22
<PAGE> 100
"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Distribution Amount" means, as to any Class of
Notes, with respect to any Distribution Date, the sum of the related
Noteholders' Interest Distribution Amount and the Noteholders' Principal
Distribution Amount for such Distribution Date.
"Noteholders' Interest Carryover" has the meaning set forth
in the Terms Supplement.
"Noteholders' Interest Carryover Shortfall" means, as to any
Class of Notes, with respect to any Distribution Date, the excess of (i) the
sum of the related Noteholders' Interest Distribution Amount on the preceding
Distribution Date and any Noteholders' Interest Carryover Shortfall on such
preceding Distribution Date over (ii) the amount of interest actually allocated
to such Noteholders on such preceding Distribution Date, plus interest on the
amount of such excess interest due to such Noteholders, to the extent permitted
by law, at the related Class Interest Rate from such preceding Note
Distribution Date to the current Distribution Date.
"Noteholders' Interest Distribution Amount" means, as to any
Class of Notes, with respect to any Distribution Date, the sum of (i) the
amount of interest accrued at the respective Class Interest Rate for each
Interest Period since the last Distribution Date for such Class of Notes (or in
the case of the first Distribution Date, the Closing Date) on the outstanding
principal balance of such Class of Notes on the immediately preceding
Distribution Date relating to such Notes after giving effect to all principal
distributions to holders of Notes of such Class on such date (or, in the case
of the first Distribution Date, the Closing Date) and (ii) the Noteholders'
Interest Carryover Shortfall for such Class for such Distribution Date;
provided, however, that the Noteholders' Interest Distribution Amount will not
include any Noteholders' Interest Carryover.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of (i) the sum of the Noteholders'
Principal Distribution Amount on such Distribution Date and any outstanding
Noteholders' Principal Carryover Shortfall for the preceding Distribution Date
over (ii) the amount of principal actually allocated to the Noteholders on such
Distribution Date.
"Noteholders' Principal Distribution Amount" means, as to any
Distribution Date, the sum of (i) the Principal
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<PAGE> 101
Distribution Amount for the three Collection Periods (or with respect to the
Class A-1 Notes, the one Collection Period) immediately preceding the month of
such Distribution Date (ii) any Parity Percentage Payments to be made on such
Distribution Date, (iii) the Noteholders' Principal Carryover Shortfall as of
the close of the preceding Distribution Date and (iv) the amount, if any,
remaining in deposit in the Note Distribution Account following the preceding
Distribution Date; provided, however, that the Noteholders' Principal
Distribution Amount allocable to a Class of Notes will not exceed the
Outstanding Amount of such Class of Notes. In addition, with respect to each
Class of Notes, on the related Final Maturity Date the Noteholders' Principal
Distribution Amount will include the amount required to reduce the Outstanding
Amount of such Notes to zero.
"Notional Amount" means as to any Swap Agreement, with
respect to any Quarterly Distribution Date, the percentage of the original
Outstanding Amount of the related Class of Fixed Rate Notes set forth on the
Scheduled Principal Balance Table for such Class for the Quarterly Distribution
Date immediately preceding such Quarterly Distribution Date (or in the case of
the first Quarterly Distribution Date, the original Outstanding Amount of such
Class).
"Obligor" on a Financed Student Loan means the borrower or
co-borrowers of such Financed Student Loan and any other Person who owes
payments in respect of such Financed Student Loan, including (i) the Guaranty
Agency thereof and (ii) with respect to any Interest Subsidy Payment or Special
Allowance Payment, if any, thereon, the Department.
"Officer's Certificate" means (i) in the case of the Issuer,
a certificate signed by an Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Transferor, the Master Servicer or the
Administrator, a certificate signed by an Authorized Officer of the Transferor,
the Master Servicer or the Administrator, as appropriate and (iii) in the case
of the Servicer, a certificate signed by an Authorized Officer of the Servicer.
"One-Month LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of one month commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that
day will be determined on the basis of the rates at which deposits in U.S.
dollars, having the Index Maturity and in a principal amount of
24
<PAGE> 102
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Master Servicer will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Master Servicer, at
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
for loans in U.S. dollars to leading European banks having the Index Maturity
and in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR in effect for the applicable Interest Period will
be One-Month LIBOR in effect for the previous Interest Period.
"Opinion of Counsel" means (i) with respect to the Issuer,
one or more written opinions of counsel who may, except as otherwise expressly
provided in the Master Indenture, be employees of or counsel to the Issuer or
Administrator or any of their Affiliates and who shall be reasonably
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.1 of the Master Indenture, and shall be
in form and substance reasonably satisfactory to the Indenture Trustee and (ii)
with respect to the Transferor, the Administrator or the Master Servicer, one
or more written opinions of counsel who may be an employee of or counsel to the
Transferor, the Administrator or the Master Servicer, which counsel shall be
reasonably acceptable to the Indenture Trustee and the Eligible Lender Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders thereof
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to the Indenture); and
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<PAGE> 103
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Transferor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Indenture Trustee either actually knows
to be so owned or has received written notice thereof shall be do disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Transferor or
any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or Class of Notes or Certificates as applicable, Outstanding at the
date of determination.
"Parity Percentage" means, as of any date of determination,
the fraction expressed as a percentage, the numerator of which is the sum of
(i) the then Pool Balance and (ii) all amounts on deposit in the Collection
Account and the Reserve Account and the denominator of which is the sum of the
aggregate Outstanding Amount of the Notes and the Certificates, accrued and
unpaid interest thereon plus accrued and unpaid Transaction Fees and
Consolidation Loan Fees.
"Parity Percentage Payment" means, with respect to any
Distribution Date, the amount, if any, to be transferred from the Collection
Account to the Note Distribution Account pursuant to Section 5.5(e) of the
Transfer and Servicing Agreement, up to the amount necessary for the Parity
Percentage to equal 102.5% after giving effect to all distributions to be made
on such Distribution Date.
"Participant" means a Securities Depository Participant.
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<PAGE> 104
"Paying Agent" means the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Master Indenture and is authorized by the Issuer to make
the payments to and distributions from the Collection Account and payments of
principal of and interest and any other amounts owing on the Notes on behalf of
the Issuer.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance
Agency.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pledged Account or Fund" means the Collection Account, the
Reserve Account, the Note Distribution Account and the Certificate Distribution
Account.
"PLUS Loan" means a Federal Loan made pursuant to the
provisions of the PLUS program established under Section 428B of the Higher
Education Act (or predecessor provisions).
"Pool Balance" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized), after giving effect to the
following, without duplication: (i) all payments in respect of principal
received by the Trust during such Collection Period from or on behalf of
borrowers and Guarantors and, with respect to certain payments on certain
Financed Student Loans, the Department, (ii) the principal portion of all
Purchase Amounts received by the Trust for such Collection Period and (iii) any
Exchanged Student Loans acquired conveyed to the Trust and any Financed Student
Loans conveyed by the Trust during such Collection Period, in each case
pursuant to Sections 2.2 and 2.3(e).
"PP Loans" means all Stafford Loans and Unsubsidized Stafford
Loans with a first disbursement made by the Transferor on or after July 1,
1996.
"PP Program" means the PNC Bank Preferred Payment Program.
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<PAGE> 105
"Predecessor Note" means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.7 of the Master Indenture and
in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Primary Servicer" means, with respect to any Financed
Student Loan, the entity responsible for the primary servicing of such Financed
Student Loan on a day to day basis, it being understood that where a
subservicer appointed in accordance with the terms of the Transfer and
Servicing Agreement has responsibility for servicing a Financed Student Loan,
such subservicer and not the Master Servicer shall be the Primary Servicer with
respect such Financed Student Loan.
"Principal Distribution Amount" means, with respect to any
Collection Period, the excess of (A) the sum, without duplication, of the
following amounts: (i)#that portion of all collections received by the Master
Servicer or any Servicer on the Financed Student Loans that is allocable to
principal (including the portion of any Guarantee Payments received that is
allocable to principal of the Financed Student Loans); (ii) the portion of the
proceeds allocable to principal from the sale of Financed Student Loans by the
Trust during such Collection Period; (iii) all Realized Losses incurred during
such Collection Period; (iv) to the extent attributable to principal, the
Purchase Amount received with respect to each Financed Student Loan repurchased
by the Transferor or purchased by the Master Servicer under an obligation which
arose during the related Collection Period; and (v) the Adjustment Payments, if
any, received from the Transferor during such Collection Period over (B) the
Issuer Consolidation Payments for such Collection Period; provided, however,
that the Principal Distribution Amount will exclude all payments and proceeds
of any Financed Student Loans the Purchase Amount of which has been included in
Available Funds for a prior Collection Period.
"Principal Factor" means, as of any Distribution Date for
each Class of Notes, a seven-digit decimal figure equal to the Outstanding
Amount of such Class of Notes (after giving effect to any payments of principal
made on such Distribution Date) divided by the original Outstanding Amount of
such Class. The Principal Factor will be 1.0000000 for each Class of Notes as
of the Closing Date; thereafter, the Principal Factor for each Class of Notes
will decline to reflect reductions in the outstanding principal balance of such
Class.
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<PAGE> 106
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Amount" means, as to any Financed Student Loan on
any date of determination, the amount required to prepay in full the
outstanding principal balance of such Financed Student Loan as of the last day
of the most recently completed Collection Period, including all accrued but
unpaid interest thereon (including interest to be capitalized) through the last
day of the Collection Period in which such Financed Student Loan is being
purchased.
"Purchased Student Loan" means a Financed Student Loan
purchased pursuant to Section 4.5 of the Transfer and Servicing Agreement or
repurchased pursuant to Section#3.2 of the Transfer and Servicing Agreement.
"Qualified Letter of Credit" means a letter of credit
delivered or to be delivered to the Indenture Trustee in lieu of a deposit of
cash or Eligible Investments in the Reserve Account for such Class or Series,
which letter of credit shall
(a) be irrevocable and name the Indenture Trustee, in
its capacity as such, as the sole beneficiary thereof;
(b) be issued by a bank whose credit standing is
acceptable to each of the rating agencies which are rating or
have rated the Notes of such Series;
(c) provide that if at any time the then current credit
standing of the issuing bank is such that the continued
reliance on such letter of credit for the purpose or purposes
for which it was originally delivered to the Indenture
Trustee would result in a downgrading of any rating of the
Notes of such Class or Series, the Indenture Trustee may
either draw under such letter of credit any amount up to and
including the entire amount then remaining available for
drawing thereunder or terminate such letter of credit;
(d) be transferable to any successor trustee hereunder
with respect to such Class or Series; and
(e) meet such other standards as may be specified in the
Terms Supplement.
"Qualified Institutional Buyer" has the meaning ascribed to
such term in Rule 144A under the Securities Act.
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<PAGE> 107
"Quarterly Distribution Date" means, the 25th day of each
January, April, July, and October or if such day is not a Business Day, the
next succeeding Business Day, commencing July 25, 1997.
"Rate Determination Date" means for the LIBOR Rate Notes and
the Certificates, the date which is both two Business Days and two London
Business Days preceding the related Rate Adjustment Date.
"Rating Agency" means Moody's, Standard & Poor's and Fitch.
If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Transferor, notice of which
designation shall be given to the Indenture Trustee, the Eligible Lender
Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Transferor, the Master
Servicer, the Eligible Lender Trustee and the Indenture Trustee in writing that
such action will not result in and of itself in a reduction or withdrawal of
the then current ratings of each Class of Notes.
"Realized Loss" means, for each Financed Student Loan
submitted to a Guarantor for a Guarantee Payment, the excess, if any, of (i)
the unpaid principal balance of such Financed Student Loan on the date it was
first submitted to a Guarantor for a Guarantee Payment over (ii) all amounts
received on or with respect to principal on such Financed Student Loan
(including amounts received pursuant to Sections 3.2 and 4.5 of the Transfer
and Servicing Agreement) up through the earlier to occur of (A) the date a
related Guarantee Payment is made or (B) the last day of the Collection Period
occurring 12 months after the date the claim for such Guarantee Payment is
first denied.
"Record Date" means, with respect to a Distribution Date, the
close of business on the second Business Day preceding such Distribution Date.
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator or the Transferor and (iii) having an established place of
business in London.
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<PAGE> 108
"Related Financed Student Loan File" has the meaning
specified in Section 3.8(a) of the Transfer and Servicing Agreement.
"Repayment Phase" means the period during which the related
borrower is required to make payments of principal and interest on the related
Financed Student Loan.
"Requisite Amount" means, with respect to any Series for
which a Reserve Account is required to be maintained, an amount specified in or
determined pursuant to the Terms Supplement.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section#5.1 of the related Transfer and
Servicing Agreement.
"Reserve Account Initial Deposit" means, $10,300,000.
"Responsible Officer" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
with direct responsibility for the administration of the Indenture and the
other Basic Documents on behalf of the Indenture Trustee, including any
Managing Director, Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary, or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Schedule of Financed Student Loans" means the master listing
of the Financed Student Loans set forth in Schedule A-1 and Schedule A-2 to the
Transfer and Servicing Agreement and Schedule A to each Transfer Agreement, in
each case as from time to time amended or supplemented to reflect the Financed
Student Loans then subject to the Lien of the Indenture. The Schedule of
Financed Student Loans may be in the form of microfiche or in the form of
electronic media.
"Scheduled Principal Balance Table" means the Scheduled
Principal Balance Table set forth on Schedule C to the Transfer and Servicing
Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
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<PAGE> 109
"Securities Depository" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Securities Depository Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository.
"Senior Notes" means the Class A Notes.
"Senior Noteholder" means the holder of a Senior Note.
"Serial Loan" means a Financed Student Loan that is serial to
a student loan owned by a third party.
"Series" means a separate Series of Notes issued pursuant to
the Master Indenture, which Series may, as provided in the Terms Supplement, be
divided into two or more Classes.
"Series 1997-2 Notes" means the Notes designated as the
Issuer's Asset-Backed Notes, Series 1997-2, issued pursuant to the terms of the
Master Indenture and the Terms Supplement and having an original principal
amount equal to $1,030,000,000.
"Servicer" means AFSA, USA Group, PHEAA or, subject to
satisfying the Rating Agency Condition, another entity appointed by the Master
Servicer to service the Financed Student Loans, in its capacity as servicer of
the Financed Student Loans.
"Servicer's Report" means any report of the Master Servicer
delivered pursuant to Section#4.8(a) of the Transfer and Servicing Agreement,
substantially in the form acceptable to the Administrator.
"Servicing Fee" means a quarterly fee in an amount equal to
1.00% of the average Pool Balance as of the last day of each of the three
Collection Periods immediately preceding such Quarterly Distribution Date.
"SLS Loan" means a Federal Loan designated as such that is
made under the Supplemental Loans for Students Program pursuant to the Higher
Education Act.
"Special Allowance Payments" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect
of the Financed Student Loans to the Eligible Lender Trustee on behalf of the
Trust in accordance with the Higher Education Act.
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<PAGE> 110
"Specified Reserve Account Balance" means, with respect to
any Distribution Date, an amount equal to the greater of (i) 1.00% of the sum
of the Outstanding Amount of the Notes and the Certificate Balance on such
Distribution Date, after giving effect to all payments to be made on such date;
or (ii) $1,000,000; provided, however, that such balance shall not exceed the
sum of the aggregate Outstanding Amount of the Notes and the Certificate
Balance.
"Stafford Loan" means a student loan designated as such that
is made under Section 428 of the Higher Education Act (excluding Unsubsidized
Stafford Loans).
"Standard & Poor's" means Standard & Poor's Rating Services,
a division of The McGraw-Hill Companies, Inc., and its successors and assigns.
"State" means any one of the 50 States of the United States
of America or the District of Columbia.
"Subcustodian" has the meaning specified in Section 3.8 of
the Transfer and Servicing Agreement.
"Subordinated Notes" means the Class B Notes.
"Subordinated Noteholder" means any Noteholder of a
Subordinated Note.
"Subsequent Cut-off Date" means the day as to which principal
and interest accruing with respect to an Exchanged Student Loan are transferred
to the Eligible Lender Trustee on behalf of the Issuer pursuant to Section 2.2
of the Transfer and Servicing Agreement.
"Subservicing Agreement" has the meaning specified in Section
4.13 of the Transfer and Servicing Agreement.
"Successor Administrator" has the meaning specified in
Section#3.7(e) of the Indenture.
"Successor Master Servicer" has the meaning specified in
Section#3.7(e) of the Indenture.
"Swap Agreements" mean the ISDA Master Agreement dated as of
June 20, 1997, between Deutsche Bank AG, New York Branch, and the Issuer; and
the ISDA Master Agreement dated as of June 20, 1997, between Morgan Guaranty
Trust Company of New York and the Issuer, in each case including the schedules
attached thereto and the confirmations issued in connection therewith, and any
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<PAGE> 111
similar agreement subsequently entered into by the Trust, as each may be
amended, supplemented or otherwise modified from time to time.
"Swap Termination Payments" means termination payments, if
any, owed by the Trust under the Swap Agreements.
"Telerate Page 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Terms Supplement" means, the Second Terms Supplement to the
Indenture dated as of June 25, 1997 between the Issuer and The Indenture
Trustee.
"Transaction Fees" means, collectively, the Servicing Fee,
the Administration Fee, Indenture Trustee Fee and the Eligible Lender Trustee
Fee.
"Transfer Agreement" has the meaning set forth in Section
2.2(b) of the Transfer and Servicing Agreement.
"Transfer and Servicing Agreement" means the Transfer and
Servicing Agreement dated as of June 25, 1997, among the Issuer, the
Transferor, the Administrator, the Eligible Lender Trustee and the Master
Servicer, as amended from time to time.
"Transferor" means PNC Bank, National Association.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any
document or instrument to specific provisions of proposed or temporary
regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Trust" means the Issuer, established pursuant to the
Trust Agreement.
"Trust Account Property" means the Trust Accounts, all
amounts and investments held from time to time in any Trust Account (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Account Initial
Deposit, if any, and all proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section#5.1 of
the Transfer and Servicing Agreement.
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<PAGE> 112
"Trust Agreement" means the Trust Agreement dated as of March
27, 1997 and amended on the Closing Date, between the Depositor and the
Eligible Lender Trustee, as further amended and supplemented from time to time.
"Trust Certificate" means a Certificate.
"Trust Certificateholder" means a person in whose name a
Trust Certificate is registered in the Certificate Register.
"Trust Estate" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to (i) the
property and rights assigned to the Trust pursuant to Article II of the
Transfer and Servicing Agreement and each Transfer Agreement, (ii) the Swap
Agreements, (iii) all funds on deposit from time to time in the Trust Accounts
and (iv) all other property of the Trust from time to time, including any
rights of the Eligible Lender Trustee and the Trust pursuant to the Transfer
and Servicing Agreement, the Administration Agreement and the other Basic
Documents.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trust Swap Payment" means, as to the Swap Agreements with
respect to any Quarterly Distribution Date, the excess, of (i) the aggregate
amount accrued on the Notional Amounts of the Swap Agreements during the three
Interest Periods immediately preceding such Quarterly Distribution Date (or in
the case of the first Distribution Date, since the Closing Date) pursuant to
the Swap Agreements over (ii) the aggregate amount payable under the Swap
Agreements on such Quarterly Distribution Date by each Counterparty to the
Trust.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"Unsubsidized Stafford Loan" means a Federal Loan designated
as such that is made under Section 428H of the Higher Education Act.
"USA Group" means USA Group Loan Services, Inc.
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<PAGE> 113
SCHEDULE A-1
TO THE
TRANSFER AND SERVICING AGREEMENT
Schedule of Financed Student Loans
----------------------------------
A-1
<PAGE> 114
SCHEDULE A-2
TO THE
TRANSFER AND SERVICING AGREEMENT
Schedule of Financed Student Loans
----------------------------------
A-2
<PAGE> 115
SCHEDULE B
TO THE
TRANSFER AND SERVICING AGREEMENT
Location of Financed Student Loan Files
---------------------------------------
Name of subcustodian Location of Related Financed Student Loan Files
-------------------- -----------------------------------------------
AFSA Data Corporation 501 Bleecker Street
Utica, New York 13501
Pennsylvania Higher 1200 N. 7th Street
Education Assistance Harrisburg, PA 17102
Agency
USA Group Loan 11100 USA Parkway
Services, Inc. Fishers, IN 46038
B-1
<PAGE> 116
SCHEDULE C
<TABLE>
<CAPTION>
SCHEDULED PRINCIPAL BALANCE TABLE
% OF ORIGINAL AMOUNT
DISTRIBUTION -------------------------------------------------------------------------------------------------
DATE CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS A-6 CLASS A-7
---- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
7/25/1997 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
10/25/1997 100.00 100.00 100.00 100.00 100.00 100.00
1/25/1998 100.00 100.00 100.00 100.00 100.00 100.00
4/25/1998 100.00 100.00 100.00 100.00 100.00 100.00
7/25/1998 100.00 100.00 100.00 100.00 100.00 100.00
10/25/1998 73.95 100.00 100.00 100.00 100.00 100.00
1/25/1999 47.42 100.00 100.00 100.00 100.00 100.00
4/25/1999 23.89 100.00 100.00 100.00 100.00 100.00
7/25/1999 0.00 100.00 100.00 100.00 100.00 100.00
10/25/1999 0.00 72.90 100.00 100.00 100.00 100.00
1/25/2000 0.00 48.60 100.00 100.00 100.00 100.00
4/25/2000 0.00 24.30 100.00 100.00 100.00 100.00
7/25/2000 0.00 0.00 100.00 100.00 100.00 100.00
10/25/2000 0.00 0.00 75.00 100.00 100.00 100.00
1/25/2001 0.00 0.00 50.00 100.00 100.00 100.00
4/25/2001 0.00 0.00 25.00 100.00 100.00 100.00
7/25/2001 0.00 0.00 0.00 100.00 100.00 100.00
10/25/2001 0.00 0.00 0.00 73.40 100.00 100.00
1/25/2002 0.00 0.00 0.00 47.34 100.00 100.00
4/25/2002 0.00 0.00 0.00 22.87 100.00 100.00
7/25/2002 0.00 0.00 0.00 0.00 100.00 100.00
10/25/2002 0.00 0.00 0.00 0.00 72.41 100.00
1/25/2003 0.00 0.00 0.00 0.00 46.21 100.00
4/25/2003 0.00 0.00 0.00 0.00 22.07 100.00
7/25/2003 0.00 0.00 0.00 0.00 0.00 100.00
10/25/2003 0.00 0.00 0.00 0.00 0.00 87.60
1/25/2004 0.00 0.00 0.00 0.00 0.00 76.03
4/25/2004 0.00 0.00 0.00 0.00 0.00 65.29
7/25/2004 0.00 0.00 0.00 0.00 0.00 55.37
10/25/2004 0.00 0.00 0.00 0.00 0.00 46.28
1/25/2005 0.00 0.00 0.00 0.00 0.00 38.02
4/25/2005 0.00 0.00 0.00 0.00 0.00 30.17
7/25/2005 0.00 0.00 0.00 0.00 0.00 23.14
10/25/2005 0.00 0.00 0.00 0.00 0.00 16.53
1/25/2006 0.00 0.00 0.00 0.00 0.00 10.33
4/25/2006 0.00 0.00 0.00 0.00 0.00 4.96
7/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
1/25/2007 0.00 0.00 0.00 0.00 0.00 0.00
4/25/2007 0.00 0.00 0.00 0.00 0.00 0.00
7/25/2007 0.00 0.00 0.00 0.00 0.00 0.00
10/25/2007 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
C-1
<PAGE> 117
EXHIBIT A
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Noteholders' Statement
pursuant to Section 5.7(a) of
Transfer and Servicing
Agreement (capitalized terms used
herein are defined in Appendix A thereto)
Distribution Date:_____________________
(i) Principal Factor:
(a) Class A-1:_________
(b) Class A-2: _________
(c) Class A-3:__________
(d) Class A-4:__________
(e) Class A-5:__________
(f) Class A-6:__________
(g) Class A-7:__________
(h) Class A-8:__________
(i) Class A-9:__________
(j) Class B: __________
(ii) Amount of principal being paid or distributed:
(a) Class A-1 Notes: $_________
(b) Class A-2 Notes: $_________
(c) Class A-3 Notes: $_________
(d) Class A-4 Notes: $_________
(e) Class A-5 Notes: $_________
(f) Class A-6 Notes: $_________
(g) Class A-7 Notes: $_________
(h) Class A-8 Notes: $_________
(i) Class A-9 Notes: $_________
(j) Class B Notes: $_________
(k) Certificates: $_________
(iii) (a) Amount of interest being paid or distributed:
A-1
<PAGE> 118
(1) Class A-1 Notes: $_ (based on [One-Month LIBOR]
[Net Loan Rate])
(2) Class A-2 Notes: $_________
(3) Class A-3 Notes: $_________
(4) Class A-4 Notes: $_________
(5) Class A-5 Notes: $_________
(6) Class A-6 Notes: $_________
(7) Class A-7 Notes: $_________
(8) Class A-8 Notes: $_(based on [one-month LIBOR]
[Net Loan Rate])
(9) Class A-9 Notes: $_(based on [one-month LIBOR]
[Net Loan Rate])
(10) Class B Notes: $____ (based on [One-Month
LIBOR] [the Net Loan Rate])
(11) Certificates: $____ (based on One-Month
LIBOR)
(b) Applicable Interest Rate:
(1) Class A-1: ________%
(2) Class A-2:________ %
(3) Class A-3:_________%
(4) Class A-4:_________%
(5) Class A-5:_________%
(6) Class A-6:_________%
(7) Class A-7:_________%
(8) Class A-8:_________%
(9) Class A-9:________%
(10) Class B: ________ %
(11) Certificates _____%
(iv) Amount of distribution allocable to any Noteholders' Interest
Carryover:
(a) Class A-1: $____________
(b) Class A-8: $____________
(c) Class A-9: $____________
(d) Class B: $____________
(v) Pool Balance at end of preceding Collection Period:________
(vii) After giving effect to distributions on this Distribution
Date:
(a) outstanding principal amount of Class A-1 Notes:
$___________
(b) outstanding principal amount of Class A-2 Notes:
$___________
(c) outstanding principal amount of Class A-3 Notes:
$___________
(d) outstanding principal amount of Class A-4 Notes:
$___________
A-2
<PAGE> 119
(e) outstanding principal amount of Class A-5 Notes:
$___________
(f) outstanding principal amount of Class A-6 Notes:
$___________
(g) outstanding principal amount of Class A-7 Notes:
$___________
(h) outstanding principal amount of Class A-8 Notes:
$___________
(i) outstanding principal amount of Class A-9 Notes:
$___________
(j) outstanding principal amount of Class B Notes:
$___________
(k) Certificate Balance: $_____________________
(vii) Amount of Servicing Fee, Administration Fee, Indenture
Trustee Fee and Eligible Lender Trustee Fee to be allocated for the upcoming
Distribution Date: ($_________)
(viii) (a) Aggregate amount of Realized Losses (if any) for each
Collection Period since the last Distribution Date (or since
the Closing Date in the case of the first Distribution
Date):______________
(ix) (a) Amount of distribution attributable to amounts in the
Reserve Account: $_____________
(b) Amount of other withdrawals from the Reserve Account:
$_____________
(c) Reserve Account balance $ _______________
(d) Parity percentage _____%
(e) Amount of Parity Percentage Payments $_____________
(x) The aggregate Purchase Amount paid for Financed Student Loans
purchased from the Trust during each preceding Collection
Period since the last Distribution Date (or since the Closing
Date in the case of the first Distribution Date): ___________
(xi) During the Exchange Period only, the aggregate Issuer
Consolidation Payments and Adjustment Payments, stated
separately, for each preceding Collection Period since the
last Distribution Date (or since the Closing Date in the case
of the first Distribution Date): $______________
$______________
(xii) (a) Amount of Financed Student Loans:
(1) that are 30 to 60 days delinquent:
$_______________
A-3
<PAGE> 120
(2) that are 61 to 90 days delinquent:
$_______________
(3) that are 91 to 120 days delinquent:
$_______________
(4) that more than 120 days delinquent:
$_______________
(5) for which claims have been filed with the
appropriate Guarantor and which are awaiting
payment: $_______________
(b) Amount of recoveries
(i) principal $________
(ii) interest $________
A-4
<PAGE> 121
EXHIBIT B
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Certificateholders' Statement
pursuant to Section 5.7(a) of
Transfer and Servicing Agreement
(capitalized terms used herein
are defined in Appendix A thereto)
Distribution Date:_____________________
(i) Principal Factor:
(a) Class A-1:___________
(b) Class A-2: __________
(c) Class A-3:___________
(d) Class A-4:___________
(e) Class A-5:___________
(f) Class A-6:___________
(g) Class A-7:___________
(h) Class A-8:___________
(i) Class A-9:___________
(j) Class B: ___________
(ii) Amount of principal being paid or distributed:
(a) Class A-1 Notes: $_________
(b) Class A-2 Notes: $_________
(c) Class A-3 Notes: $_________
(d) Class A-4 Notes: $_________
(e) Class A-5 Notes: $_________
(f) Class A-6 Notes: $_________
(g) Class A-7 Notes: $_________
(h) Class A-8 Notes: $_________
(i) Class A-9 Notes: $_________
(j) Class B Notes: $_________
(k) Certificates: $_________
B-1
<PAGE> 122
(iii) (a) Amount of interest being paid or distributed:
(1) Class A-1 Notes: $_ (based on [one-month LIBOR]
[Net Loan Rate])
(2) Class A-2 Notes: $____
(3) Class A-3 Notes: $_________
(4) Class A-4 Notes: $_________
(5) Class A-5 Notes: $_________
(6) Class A-6 Notes: $_________
(7) Class A-7 Notes: $________
(8) Class A-8 Notes: $_(based on [one-month LIBOR]
[Net Loan Rate])
(9) Class A-9 Notes: $_(based on [one-month LIBOR]
[Net Loan Rate])
(10) Class B Notes: $____ (based on [One-Month
LIBOR] [the Net Loan Rate])
(11) Certificates: $____ (based on One-Month
LIBOR)
(b) Applicable Interest Rate:
(1) Class A-1:_________%
(2) Class A-2:________ %
(3) Class A-3:_________%
(4) Class A-4:_________%
(5) Class A-5:_________%
(6) Class A-6:_________%
(7) Class A-7:_________%
(8) Class A-8:_________%
(9) Class A-9:_________%
(10) Class B:_________ %
(11) Certificates______%
(iv) Amount of distribution allocable to any Noteholders' Interest
Carryover:
(a) Class A-1: $__________
(b) Class A-8: $__________
(c) Class A-9: $__________
(d) Class B: $__________
(v) Pool Balance at end of preceding Collection Period:________
(vii) After giving effect to distributions on this Distribution
Date:
(a) outstanding principal amount of Class A-1 Notes:
$___________
(b) outstanding principal amount of Class A-2 Notes:
$___________
B-2
<PAGE> 123
(c) outstanding principal amount of Class A-3 Notes:
$___________
(d) outstanding principal amount of Class A-4 Notes:
$___________
(e) outstanding principal amount of Class A-5 Notes:
$___________
(f) outstanding principal amount of Class A-6 Notes:
$___________
(g) outstanding principal amount of Class A-7 Notes:
$___________
(h) outstanding principal amount of Class A-8 Notes:
$___________
(i) outstanding principal amount of Class A-9 Notes:
$___________
(j) outstanding principal amount of Class B Notes:
$___________
(k) Certificate Balance: $_____________________
(vii) Amount of Servicing Fee, Administration Fee, Indenture Trustee
Fee and Eligible Lender Trustee Fee to be allocated for the
upcoming Distribution Date: ($_________)
(viii) (a) Aggregate amount of Realized Losses (if any) for each
Collection Period since the last Distribution Date (or since
the Closing Date in the case of the first Distribution
Date):______________
(ix) (a) Amount of distribution attributable to
amounts in the Reserve Account: $_____________
(b) Amount of other withdrawals from the
Reserve Account: $_____________
(c) Reserve Account balance $ _______________
(d) Parity percentage _____%
(e) Amount of Parity Percentage Payments $_____________
(x) The aggregate Purchase Amount paid for Financed Student Loans
purchased from the Trust during each preceding Collection
Period since the last Distribution Date (or since the Closing
Date in the case of the first Distribution Date):
(xi) During the Exchange Period only, the aggregate Issuer
Consolidation Payments and Adjustment Payments, stated
separately, for each preceding Collection
B-3
<PAGE> 124
Period since the last Distribution Date (or since the Closing
Date in the case of the first Distribution Date):
$______________
$______________
(xii) (a) Amount of Financed Student Loans:
(1) that are 30 to 60 days delinquent:
$_______________
(2) that are 61 to 90 days delinquent:
$_______________
(3) that are 91 to 120 days delinquent:
$_______________
(4) that more than 120 days delinquent:
$_______________
(5) for which claims have been filed
with the appropriate Guarantor
and which are awaiting payment:
$_______________
(b) Amount of recoveries
(i) principal $________
(ii) interest $________
B-4
<PAGE> 125
EXHIBIT C
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Administrator's Certificate
-----------------------------------
[To be provided by the Administrator pursuant to
Section 4.7 of the Transfer and
Servicing Agreement]
C-1
<PAGE> 126
EXHIBIT D
TO THE
TRANSFER AND SERVICING AGREEMENT
ASSIGNMENT FOR
FINANCED STUDENT LOANS
For value received, in accordance with the Transfer and
Servicing Agreement (the "Transfer and Servicing Agreement") dated as of June
25, 1997, among the undersigned, as transferor (the "Transferor"), as master
servicer (the "Master Servicer") and as administrator (the "Administrator"),
PNC Student Loan Trust I (the "Trust"), and The First National Bank of Chicago,
not in its individual capacity but solely as Eligible Lender Trustee (the
"Eligible Lender Trustee"), the undersigned does hereby contribute, assign,
transfer and otherwise convey unto the Eligible Lender Trustee on behalf of the
Trust, without recourse (subject to the obligations set forth in the Transfer
and Servicing Agreement), all right, title and interest of the undersigned in
and to (i) the Federal Loans set forth on Schedule A-1 and Schedule A-2 to the
Transfer and Servicing Agreement and all obligations of the Obligors
thereunder, including all monies paid or payable thereunder (other than
Interest Subsidy Payments and Special Allowance Payments through the applicable
Cut-off Date) after the applicable Cut-off Date, including the right to enforce
such Federal Loans in the same manner and to the same extent as the Transferor
would have the power to do but for the execution and delivery of the Transfer
and Servicing Agreement, (ii) all funds on deposit from time to time in the
Trust Accounts and in all investments and proceeds thereof (including all
income thereon) and (iii) the proceeds of any and all of the foregoing. The
foregoing contribution, assignment, transfer and conveyance does not constitute
and is not intended to result in any assumption by the Eligible Lender Trustee
or the Trust of any obligation of the Transferor to the borrowers of Initial
Financed Student Loans or any other person in connection with the Financed
Student Loans or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Transfer and Servicing Agreement and is to be governed by the
Transfer and Servicing Agreement.
Capitalized terms used but not defined herein shall have the
meaning assigned to them in Appendix A to the Transfer and Servicing Agreement,
which also contains rules as to usage that shall be applicable herein.
D-1
<PAGE> 127
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of June 25, 1997.
PNC BANK, NATIONAL ASSOCIATION,
as Transferor
By: _________________________________
Name:
Title:
D-2
<PAGE> 128
EXHIBIT E
TO THE
TRANSFER AND SERVICING AGREEMENT
TRANSFER AGREEMENT
TRANSFER AGREEMENT No. ____ dated as of _________, ____, among PNC STUDENT LOAN
TRUST I, a Delaware business trust (the "Issuer"), PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as transferor (the "Transferor"),
and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, not in
its individual capacity but solely as Eligible Lender Trustee of the Issuer
(the "Eligible Lender Trustee").
W I T N E S S E T H:
WHEREAS the Issuer, the Transferor, the Eligible Lender
Trustee, the Administrator and the Master Servicer (as defined in the Appendix
A to the Transfer and Servicing Agreement) are parties to the Transfer and
Servicing Agreement dated as of June 25, 1997 (as amended or supplemented, the
"Transfer and Servicing Agreement");
WHEREAS pursuant to the Transfer and Servicing Agreement, the
Transferor wishes to convey the Federal Loans referred to in Section 2 hereof
(the "Exchanged Student Loans") to the Eligible Lender Trustee on behalf of the
Issuer; and
WHEREAS, the Eligible Lender Trustee and the Issuer are
willing to accept such conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the parties hereto hereby agree, intending to
be legally bound hereby, as follows:
1. Definitions and Usage. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in
Appendix A to the Transfer and Servicing Agreement, which also contains rules
of construction and usage that shall be applicable herein.
In addition, the following terms have the following meanings:
"Exchange Date" means, with respect to the Exchanged Student
Loans, ______________.
"Subsequent Cut-Off Date" means, with respect to each
Exchanged Student Loan, the date specified as such on Schedule A
hereto.
1
<PAGE> 129
2. Schedule of Exchanged Student Loans. Attached hereto as
Schedule A is a supplement to the Schedule of Financed Student Loans listing
the Exchanged Student Loans to be conveyed on the Exchange Date to the Eligible
Lender Trustee on behalf of the Issuer pursuant to this Agreement. Attached
hereto as Schedule B is a list of Financed Student Loans to be conveyed on the
Exchange Date to the Transferor by the Eligible Lender Trustee on behalf of the
Issuer in exchange for the Exchanged Student Loans, which Schedule B shall be
deemed to modify the Schedule of Financed Student Loans to delete therefrom
such Financed Student Loans being so conveyed to the Transferor.
3. Conveyance of Exchanged Student Loans. In consideration of
the Issuer's delivery to or upon the order of the Transferor of the Financed
Student Loans listed on Schedule B attached hereto, the Transferor does hereby
contribute, transfer, assign, set over and otherwise convey, without recourse
(subject to the obligations set forth in the Transfer and Servicing Agreement),
to the Eligible Lender Trustee on behalf of the Issuer:
(a) all right, title and interest in and to each Exchanged
Student Loan, and all obligations of the Obligors thereunder,
including all moneys paid thereunder (other than Interest Subsidy
Payments and Special Allowance Payments payable through the Subsequent
Cut-Off Date), and all written communications received by the
Transferor with respect thereto and still retained by the Transferor
in accordance with its retention policies (including borrower
correspondence, notices of death, disability or bankruptcy and
requests for deferrals or forbearances), on and after the Subsequent
Cut-Off Date; and
(b) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Issuer as of the date of this
Agreement and as of the Exchange Date that:
(a) Organization and Good Standing. The Transferor is duly
organized and validly existing as a national banking association with
the power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted, except for such power and authority the absence
of which would not have a material adverse effect on the Transferor or
its ability to consummate the transactions contemplated by this
Agreement and the Transferor had at all relevant times, and has, the
power, authority and legal right to originate, acquire and own the
Exchanged Student Loans.
2
<PAGE> 130
(b) Power and Authority. The Transferor has the requisite
corporate power and authority to execute and deliver this Agreement
and to carry out its terms; the Transferor has requisite corporate
power and authority to transfer and assign the property to be
contributed and assigned to and deposited with the Issuer (or with the
Eligible Lender Trustee on behalf of the Issuer) and the Transferor
has duly authorized such transfer and assignment to the Issuer (or to
the Eligible Lender Trustee on behalf of the Issuer) by all necessary
corporate action on the Transferor's part; and the execution, delivery
and performance of this Agreement have been duly authorized by the
Transferor by all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
similar laws relating to creditors' rights generally or the rights of
creditors of banks the deposit accounts of which are insured by the
FDIC and subject to general principles of equity.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not violate, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time
or both) a default under, the charter or by-laws of the Transferor, or
any material indenture, agreement or other material instrument to
which the Transferor is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such material indenture,
agreement or other material instrument (other than pursuant to the
Basic Documents); nor violate any material law or, to the knowledge of
the Transferor, any material order, rule or regulation applicable to
it of any court or of any Federal or State regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties.
(e) No Proceedings. There are no proceedings or
investigations pending against the Transferor or, to its best
knowledge, threatened against the Transferor, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or its properties: (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that could
reasonably be expected to have a material and adverse effect on the
performance by the Transferor of its obligations under, or the
validity or enforceability of, this Agreement or (iv) seeking to
affect adversely the Federal or State income tax attributes of the
Issuer, the Notes or the Certificates.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any court,
regulatory body, administrative
3
<PAGE> 131
agency or other government instrumentality required to be obtained,
effected or given by the Transferor in connection with the execution
and delivery by the Transferor of this Agreement and the performance by
the Transferor of the transactions contemplated by this Agreement have
been duly obtained, effected or given and are in full force and effect.
(g) Principal Balances. (i) The aggregate principal balance
of the Consolidation Loans and Serial Loans that are Exchanged Student
Loans listed on Schedule A attached hereto and conveyed to the
Eligible Lender Trustee on behalf of the Issuer pursuant to this
Agreement as of their respective Subsequent Cut-Off Dates is
$___________ and $___________, respectively; (ii) the aggregate
principal balance of the Financed Student Loans listed on Schedule B
attached hereto and to be conveyed to the Transferor pursuant to
Section 2.3(d) of the Transfer and Servicing Agreement is $_______;
(iii) the Consolidation Prepayments on deposit in the Collection
Account is $_________; (iv) the Issuer Consolidation Payments for the
Exchange Date is $__________; and (v) the Exchange Adjustment for the
Exchange Date is $_________.
5. Conditions Precedent. The obligation of the Issuer to
acquire the Exchanged Student Loans hereunder is subject to the satisfaction,
on or prior to the Exchange Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Transferor in Section 4 of
this Agreement and the representations and warranties made with
respect to the Exchanged Student Loans in Section 3.1 of the Transfer
and Servicing Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Exchange Date.
(b) Transfer and Servicing Agreement Conditions. Each of
the conditions set forth in Section 2.2(b) of the Transfer and
Servicing Agreement shall have been satisfied.
(c) Delivery of Assignment. The Transferor shall have
delivered an Assignment substantially in the form of Annex A hereto.
Upon the satisfaction of the conditions set forth in this
Section 5, the Eligible Lender Trustee shall have executed and delivered to the
Transferor an Assignment, substantially in the form of Annex B hereto.
6. Ratification of Agreement. As supplemented by this
Agreement, the Transfer and Servicing Agreement is in all respects ratified and
confirmed and the Transfer and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
4
<PAGE> 132
7. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
8. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
9. Headings. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK
OF CHICAGO, not in its individual
capacity but solely as Eligible
Lender Trustee
By: ___________________________________
Name:
Title:
5
<PAGE> 133
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
By: _____________________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as
Transferor
By: _____________________________________
Name:
Title:
Acknowledged and accepted as
of the date first above written:
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By ________________________________
Name:
Title:
6
<PAGE> 134
ANNEX A
TO THE TRANSFER AGREEMENT
ASSIGNMENT
For value received, in accordance with the Transfer and Servicing
Agreement (the "Transfer and Servicing Agreement") dated as of June 25, 1997,
among the undersigned, as transferor (the "Transferor"), as master servicer and
as administrator, PNC Student Loan Trust I (the "Trust"), The First National
Bank of Chicago, not in its individual capacity but solely as Eligible Lender
Trustee (the "Eligible Lender Trustee"), and the Transfer Agreement No. ______
dated as of _________ __, ____ (the "Transfer Agreement") among the Transferor,
the Trust and the Eligible Lender Trustee, the undersigned does hereby
contribute, assign, transfer and otherwise convey unto the Eligible Lender
Trustee on behalf of the Trust, without recourse (subject to the obligations set
forth in the Transfer and Servicing Agreement), all right, title and interest of
the undersigned in and to (i) the Exchanged Student Loans and all obligations of
the Obligors thereunder, including all moneys paid or payable thereunder (other
than Interest Subsidy Payments and Special Allowance Payments through the
related Subsequent Cut-Off Date) after the related Subsequent Cut-Off Date and
(ii) the proceeds of any and all of the foregoing. The foregoing contribution,
assignment, transfer and conveyance does not constitute and is not intended to
result in any assumption by the Eligible Lender Trustee or the Trust of any
obligation of the Transferor to the borrowers of such Exchanged Student Loans or
any other person in connection with the Exchanged Student Loans or any agreement
or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Exchanged Student Loan described
in Schedule A to the Transfer Agreement in favor of the Eligible Lender Trustee
on behalf of the Trust, without recourse (subject to the obligations set forth
in the Transfer and Servicing Agreement) against the undersigned. This
endorsement may be effected by attaching a facsimile hereof to each or any of
such promissory notes.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Transfer and Servicing Agreement and the Transfer Agreement and is to be
governed by the Transfer and Servicing Agreement and the Transfer Agreement.
A-1
<PAGE> 135
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Transfer Agreement or in Appendix A to the Transfer and
Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of _____________, ____.
PNC BANK, NATIONAL ASSOCIATION,
as Transferor
By: ____________________________
Name:
Title:
A-2
<PAGE> 136
ANNEX B
TO THE TRANSFER AGREEMENT
ASSIGNMENT
For value received, in accordance with the Transfer and Servicing
Agreement (the "Transfer and Servicing Agreement") dated as of June __, 1997,
among the undersigned, (the "Trust"), as master servicer and as administrator
(the "Transferor"), and The First National Bank of Chicago, not in its
individual capacity but solely as Eligible Lender Trustee (the "Eligible Lender
Trustee"), and the Transfer Agreement No. _____ dated as of _________ __, ____
(the "Transfer Agreement") among the Transferor, the Trust and the Eligible
Lender Trustee, the undersigned does hereby contribute, assign, transfer and
otherwise convey unto the Transferor, without recourse (subject to the
obligations set forth in the Transfer and Servicing Agreement), all right, title
and interest of the undersigned in and to (i) the Financed Student Loans set
forth on Schedule B to the Transfer Agreement and all obligations of the
Obligors thereunder, including all moneys paid or payable thereunder (other than
Interest Subsidy Payments and Special Allowance Payments through the related
Subsequent Cut-off Date) after the related Subsequent Cut-off Date and (ii) the
proceeds of any and all of the foregoing. The foregoing contribution,
assignment, transfer and conveyance does not constitute and is not intended to
result in any assumption by the Transferor of any obligation of the Eligible
Lender Trustee or the Trust to the borrowers of such Financed Student Loans or
any other person in connection with such Financed Student Loans or any agreement
or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Financed Student Loan described
in Schedule B to the Transfer Agreement in favor of the Transferor, without
recourse, against the undersigned. This endorsement may be effected by
attaching a facsimile hereof to each or any of such promissory notes.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Transfer and Servicing Agreement and the Transfer Agreement and is to be
governed by the Transfer and Servicing Agreement and the Transfer Agreement.
B-1
<PAGE> 137
Capitalized terms used but not defined herein shall have the
meaning assigned to them in the Transfer Agreement or in Appendix A to the
Transfer and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of _____________, ____.
PNC STUDENT LOAN TRUST I
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as Eligible
Lender Trustee on behalf of the Trust
By: _____________________________________
Name:
Title:
B-2
<PAGE> 138
SCHEDULE A
TO THE TRANSFER AGREEMENT NO. ______
[List of Exchanged Student Loans and
their related Subsequent Cut-Off Dates]
B-1
<PAGE> 139
SCHEDULE B
TO THE
TRANSFER AGREEMENT NO. ____
[List of Financed Student Loans
to be Conveyed to the Transferor]
B-2
<PAGE> 1
Exhibit 4.6
(Multicurrency--Cross Border)
LOGO
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 20, 1997
-------------------------
Morgan Guaranty Trust Company of New York and PNC Student Loan Trust I
- ----------------------------------------- ------------------------
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required
currency. Where settlement is by delivery (that is, other than by payment),
such delivery will be made for receipt on the due date in the manner
customary for the relevant obligation unless otherwise specified in the
relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
<PAGE> 2
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted
or withheld from any additional amount paid by X or Y under this Section
2(d)) promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or
other documentation reasonably acceptable to Y, evidencing such payment
to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount actually
received by Y (free and clear of Indemnifiable Taxes, whether assessed
against X or Y) will equal the full amount Y would have received had no
such deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that it would
not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f)
to be accurate and true unless such failure would not have occurred
but for (I) any action taken by a taxing authority, or brought in a
court of competent jurisdiction, on or after the date on which a
Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
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<PAGE> 3
(ii) LIABILITY, IF:--
(1) X is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, to make any deduction or
withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, as the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorize such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law)).
3
<PAGE> 4
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and to
be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
4
<PAGE> 5
organised, managed and controlled, or considered to have its seat, or in which
a branch or office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction") and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in respect of
the other party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with
or performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party in
this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or
deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
5
<PAGE> 6
described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice requirement or
grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2)becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of
any such proceeding or petition instituted or presented against
it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or
the making of an order for its winding-up or liquidation or (B) is
not dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5) has
a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation
or merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
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<PAGE> 7
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it become unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
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<PAGE> 8
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(I), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its right
to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its right and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or
a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the case
of a Credit Event Upon Merger or an Additional Termination Event if
there is only one Affected Party may, by not more than 20 days notice to
the other party and provided that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving details
of the relevant account to which any amount payable to it is to be paid.
In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence
and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, form (and including) the
relevant Early Termination Date to (but excluding) the date such amount
is paid, at the Applicable Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment
method, either the "First Method" or the "Second Method". If the parties fail
to designate a payment measure or payment method in the Schedule, it will be
deemed that "Market Quotation" or the "Section Method", as the case may be,
shall apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive number, the Defaulting Party
will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's Loss
in respect of this Agreement. If that amount is a positive number,
the Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3),
if Market Quotation applies, or Section 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting
Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will
be subject to such adjustments as are appropriate and permitted by law
to reflect any payments or deliveries made by one party to the other
under this Agreement (and retained by such other party) during the
period from the relevant Early Termination Date to the date for payment
determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security of otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith converting the currency so tendered into the Contractual Currency,
of the full amount in the Contractual Currency of all amounts payable in respect
of this Agreement. If for any reason the amount in the Contractual Currency so
received falls short of the amount in the Contractual Currency payable in
respect of this Agreement, the party required to make the payment will, to the
extent permitted by applicable law, immediately pay such additional amount in
the Contractual Currency as may be necessary to compensate for the shortfall. If
for any reason the amount in the Contractual Currency so received exceeds the
amount in the Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results form any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts (including
by facsimile transmission) or be created by an exchange of telexes or by
an exchange of electronic messages on an electronic messaging system,
which in each case will be sufficient for all purposes to evidence a
binding supplement to this Agreement. The parties will specify therein
or through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the laws
of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
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reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE INN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, actin, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified
as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
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"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have
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been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
16
<PAGE> 17
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect to any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the sport exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
<PAGE> 18
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
MORGAN GUARANTY TRUST PNC STUDENT LOAN TRUST I
COMPANY OF NEW YORK
By: /s/ Debra Novak By: The First National Bank of
------------------ Chicago not in its individual
Name: Debra Novak capacity, but solely in its
Title: Vice President capacity as Eligible Lender
Date: June 24,1997 Trustee for PNC Student Loan
Trust I
By: /s/ Steve M. Husbands
------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
Date: June 24, 1997
18
<PAGE> 19
EXECUTION COPY
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of June 20, 1997
between
Morgan Guaranty Trust and PNC Student Loan Trust I
Company of New York (the "Counterparty")
("Morgan")
PART 1
TERMINATION PROVISIONS
In this Agreement:-
(1) "Specified Entity" shall not apply.
(2) "Specified Transaction" will have the meaning specified in Section 14.
(3) The "Cross Default" provisions of Section 5(a)(vi) will not apply to
Morgan or the Counterparty.
(4) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Morgan or the Counterparty.
(5) For purposes of computing amounts payable on early termination:
(a) Market Quotation will apply to this Agreement; and
(b) The Second Method will apply to this Agreement;
provided, however, that in the case of an Event of Default with
respect to Morgan as the Defaulting Party or a Termination Event with
respect to Morgan as the Affected Party,
<PAGE> 20
-2-
the related Settlement Amount, if negative, will be deemed to be zero
if the Market Quotation cannot be determined.
(6) MARKET QUOTATION. Notwithstanding anything to the contrary in the
definition of Market Quotation in Section 14, in the case of an Event
of Default with respect to Morgan as the Defaulting Party or a
Termination Event with Morgan as the Affected Party, the Market
Quotation, if Negative, will be deemed to be the negative quotation,
if any, with the highest absolute value received from any Reference
Market-maker, even if only one quotation is provided, with which the
Counterparty is able, using its best efforts, to enter into a
Replacement Transaction even if the Counterparty reasonably believes
such Market Quotation would not produce a commercially reasonable
result.
(7) REFERENCE MARKET-MAKER. Will not have the meaning specified in Section
14, but will instead mean the following:
"Reference Market-maker" means five leading dealers in the
relevant market selected by the party determining the Market
Quotation in good faith (a) from among dealers which are
rated not lower than investment grade by Standard & Poor's
Rating Group ("S&P") and Moody's Investors Service, Inc.
("Moody's") which satisfy the criteria that such party
applies generally at that time in deciding whether to offer
or make an extension of credit and (b) to the extent
practicable, from among dealers having an office in the same
city."
(8) "Termination Currency" means United States Dollars.
(9) Section 5(a)(iii), Section 5(a)(iv), Section 5(a)(v), Section
5(b)(ii), Section 5(b)(iii) Section 5(b)(iv) of the Agreement are
hereby deleted.
(10) Section 5(a)(ii) and Section 5(a)(viii) shall not apply with respect
to the Counterparty.
PART 2
TAX REPRESENTATIONS
REPRESENTATIONS OF MORGAN
(1) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, Morgan hereby makes the following representation:
(i) It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make
<PAGE> 21
-3-
any deduction or withholding for or on account of any Tax
from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the Counterparty under
this Agreement. In making this representation, it may rely
on:
(a) the accuracy of any representations made by the
Counterparty pursuant to Section 3(f);
(b) the satisfaction of the agreement of the
Counterparty contained in Section 4(a)(i) or
4(a)(iii) and the accuracy and effectiveness of any
document provided by the Counterparty pursuant to
Section 4(a)(i) or 4(a)(iii); and
(c) the satisfaction of the agreement of the
Counterparty contained in Section 4(d), provided
that it shall not be a breach of this representation
where reliance is placed on clause (b) and the
Counterparty does not deliver a form or document
under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(2) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Morgan represents that it is a banking corporation
organized under the laws of the State of New York and is not a foreign
corporation within the meaning of Section 7701(a)(5) of the United
States Internal Revenue Code.
REPRESENTATIONS OF THE COUNTERPARTY
(1) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, the Counterparty hereby makes the following representation:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to Morgan under this Agreement. In
making this representation, it may rely on:
(a) the accuracy of any representation made by Morgan
pursuant to Section 3(f);
(b) the satisfaction of the agreement of Morgan
contained in Section 4(a)(i) or 4(a)(iii) and the
accuracy and effectiveness of any document provided
by Morgan pursuant to Section 4(a)(i) or 4(a)(iii);
and
(c) the satisfaction of the agreement of Morgan
contained in Section 4(d),
<PAGE> 22
-4-
provided that it shall not be a breach of this representation where
reliance is placed on clause (b) and Morgan does not deliver a form or
document under Section 4(a)(iii) by reason of material prejudice to
its legal or commercial position.
(2) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, the Counterparty represents that it is a business trust
organized under the laws of the State of Delaware.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and (ii), each party agrees to deliver the
following documents, as applicable:
(1) Morgan will, on upon execution of this Agreement, deliver a
certificate (or, if available, the current authorized signature book
of Morgan) specifying the names, title and specimen signatures of the
persons authorized to execute this Agreement and each Confirmation on
its behalf.
(2) Morgan will, upon execution of this Agreement, deliver an opinion of
counsel to Morgan substantially in the form of Exhibit A hereto.
(3) The Counterparty will, on demand, deliver a certificate (or, if
available, the current authorized signature book of the Counterparty)
specifying the names, title and specimen signatures of the persons
authorized to execute this Agreement and each Confirmation on its
behalf.
(4) The Counterparty will upon execution of this Agreement deliver a fully
executed Trust Agreement dated as of March 27, 1997 among PNC Bank,
National Association, The First National Bank of Chicago and First
Chicago Delaware, Inc., as Delaware trustee (the "Trust Agreement").
(5) The Counterparty will upon execution of this Agreement deliver a legal
opinion of counsel in form and substance satisfactory to Morgan
regarding this agreement and any other matters as Morgan may
reasonably request.
Each of the foregoing documents, with the exception of the opinions delivered
pursuant to paragraphs (2) and (5) above, is covered by the representation
contained in Section 3(d) of this Agreement.
<PAGE> 23
-5-
PART 4
MISCELLANEOUS
(1) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law doctrine.
(2) NOTICES.
(a) In connection with Section 12(a), all notices to Morgan
shall, with respect to any particular Transaction, be sent to
the address, telex number or facsimile number specified in
the relevant Confirmation and any notice for purposes of
Sections 5 or 6 of the Agreement shall be sent to the address
or telex number specified below:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Attention: Global Swaps Facsimile
No.: (212) 648-5922
(b) In connection with Section 12(a), all notices to the
Counterparty shall, with respect to any particular
Transaction, be sent to the address, telex number or
facsimile number specified in the relevant Confirmation and
any notice for purposes of Sections 5 or 6 of the Agreement
shall be sent to the address or telex number specified below:
PNC Student Loan Trust I
c/o The First National Bank of Chicago,
as Eligible Lender Trustee
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Attention: Larry Dillard
Facsimile No.: (312) 407-1708
(3) NETTING OF PAYMENTS. Section 2(c)(ii) of this Agreement will not apply
with respect to all Transactions under this Agreement, with the result
that a net payment amount will be determined in respect of all amounts
payable on the same date in the same currency in respect of two or
more transactions.
(4) OFFICES; MULTIBRANCH PARTY. For purposes of Section 10:
<PAGE> 24
-6-
(a) Section 10(a) will apply; and
(b) For the purpose of Section 10(c):
(i) Morgan is a Multibranch Party and may act through its
London and New York Offices.
(ii) The Counterparty is not a Multibranch Party.
(5) CREDIT SUPPORT DOCUMENTS.
Not applicable.
(6) CREDIT SUPPORT PROVIDER.
Not applicable.
PART 5
OTHER PROVISIONS
(1) ISDA DEFINITIONS. Reference is hereby made to the 1991 ISDA
Definitions (the "1991 Definitions") and the 1992 ISDA FX and Currency
Option Definitions (the "FX Definitions"), each as published by the
International Swap Dealers Association, Inc., which are hereby
incorporated by reference herein. Any terms used and not otherwise
defined herein which are contained in the 1991 Definitions or the FX
Definitions shall have the meaning set forth therein.
(2) SCOPE OF AGREEMENT. Notwithstanding anything contained in the
Agreement to the contrary, if the parties enter into any Specified
Transaction, such Specified Transaction shall be subject to, governed
by and construed in accordance with the terms of this Agreement unless
the Confirmation relating thereto shall specifically state to the
contrary. Each such Specified Transaction shall be a Transaction for
the purposes of this Agreement.
(3) INCONSISTENCY. In the event of any inconsistency between any of the
following documents, the relevant document first listed below shall
govern: (i) a Confirmation; (ii) the Schedule; (iii) the 1991
Definitions or the FX Definitions; and (iv) the printed form of ISDA
Master Agreement.
<PAGE> 25
-7-
(4) NON-PETITION. Morgan hereby agrees that it will not being any action
(whether in bankruptcy or otherwise) against the Counterparty in any
court prior to the date which is one year and one day after all
Noteholders (as defined in the Trust Agreement) have been paid in
full.
(5) CALCULATION AGENT. The Calculation Agent will be Morgan.
(6) WAIVER OF JURY TRIAL. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Agreement or any Credit Support Document. Each party (i) certifies
that no representative, agent or attorney of the other party or any
Credit Support Provider has represented, expressly or otherwise, that
such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Agreement and provide for any Credit Support Document, as applicable,
by, among other things, the mutual waivers and certifications in this
Section.
(7) SEVERABILITY. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal, or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired thereby. The parties shall endeavor, in good faith
negotiations, to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable
provisions.
(8) NO GROSS-UP FOR COUNTERPARTY. Section 2(d) of the Agreement shall not
apply with respect to the Counterparty so that the Counterparty shall
not be obligated to gross up pursuant thereto.
(9) ASSIGNMENT. In the event the long-term, senior, unsecured debt
obligations of Morgan are lowered below the category of "AAA" by S&P
or Fitch, or "Aa1" by Moody's or such rating agencies' then equivalent
rating, or such ratings are withdrawn by S&P, Moody's, or Fitch and
the Master Servicer shall have determined in consultation with any of
the rating agencies that after giving effect to Morgan's then current
ratings, the continuation of Morgan as a swap provider will result in
the reduction or withdrawal of the then current rating of any class of
Class A Notes by such rating agency, Morgan shall assign and delegate
its rights and obligations under any Transaction to a replacement swap
provider, subject to the prior written direction of the Counterparty;
provided, however, that such assignment will not be required if within
10 Business Days of receipt of such prior written direction of the
Counterparty, the Counterparty and the Master Servicer receive written
confirmation from such rating agency that after giving effect to
Morgan's then current ratings and any other arrangement satisfactory
to the rating agencies, the
<PAGE> 26
-8-
continuation of Morgan as a swap counterparty hereunder shall not
cause the withdrawal or reduction of the rating of any class of Class
A Notes below their then current rating by such rating agency. If such
assignment is required, the assignment shall be deemed to be a
Termination Event with Morgan as the Affected Party.
(10) SCOPE OF TRUSTEE'S OBLIGATIONS. The Trustee shall not be required to
expend or risk its own funds or otherwise incur any liability in
connection with this Agreement, and Morgan shall not bring any claim
against the Trustee in its individual capacity or against the assets
of the Trustee hereunder (other than assets of the Trust) except for
such claims arising as a result of the negligence or wilful misconduct
of the Trustee.
(11) RELATIONSHIP BETWEEN PARTIES. Each party will be deemed to represent
to the other party on the date on which it enters into a Transaction
that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction):
(a) NON-RELIANCE. It is acting for its own account, and it has
made its own independent decisions to enter into that
Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgment and upon advice
from such advisors as it has deemed necessary. It is not
relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter
into that Transaction; it being understood that information
and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No
communication (written or oral) received from the other party
shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
(b) EVALUATION AND UNDERSTANDING. It is capable of assessing the
merits of and evaluating and understanding (on its own behalf
or through independent professional advice), and understands
and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the
financial and other risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or an advisor to it in respect of that
Transaction.
<PAGE> 27
-9-
Please confirm your agreement to the terms of the foregoing Schedule
by signing below.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Debra Novak
--------------------
Name: Debra Novak
Title: Vice President
PNC STUDENT LOAN TRUST I
By: The First National Bank of Chicago, not
in its individual capacity, but solely in
its capacity as Eligible Lender Trustee for
PNC Student Loan Trust I
By: /s/ Steve M. Husbands
--------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 28
CLASS A-2
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Morgan Guaranty Trust Company of New
York ("MGTNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means MGTNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate Class A-2
Notes
Termination Date: July 25, 1999, subject to adjustment in accordance with
the Following Business Day Convention
Notional Amount: For each Calculation Period, the Notional Amount shall
be the amount set forth in the Schedule of Notional
Amounts attached hereto as Exhibit A with respect to the
Class A-2 Notes
-1-
<PAGE> 29
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 5.645 %
Fixed Rate Payer
Period End Dates: The first Period End Date will be July 25,
1997. Thereafter, the Period End Dates shall
be the 25th of October, January, April and
July up to and including the Termination Date,
with No Adjustment
Fixed Rate Payer The first Payment Date will be July 25, 1997.
Payment Dates: Thereafter, the Payment Dates shall be the
25th of October, January, April and July up
to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25,
1997. Thereafter, the Payment Dates shall be
the 25th of October, January, April and July
up to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the
-2-
<PAGE> 30
United States Department of the Treasury. If
91-day Treasury Bills are not auctioned during
any period of seven consecutive calendar days
ending on and including any Friday and a Reset
Date would have occurred if such 91-day
Treasury Bills had been auctioned during that
seven day period, then the rate for the Reset
Date will be the T-Bill Rate in effect as a
result of the last such auction and will
remain in effect until such time, if any, as
the results of the 91-day Treasury Bills shall
again be so published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday
or a day on which national banking
associations or banking institutions or trust
companies in New York, New York are authorized
or obligated by law to be closed.
Calculation Agent: MGTNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Please provide
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The offices of Party A for this Transaction are New York and London.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
-3-
<PAGE> 31
Very truly yours,
Morgan Guaranty Trust Company of New York
By: /s/ Patricia A. Carlo
-------------------------------------
Name: Patricia A. Carlo
Title: Associate
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN TRUST I
By: The First National Bank of Chicago, not in its
individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
--------------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
-4-
<PAGE> 32
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.0 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.0 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.0 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.0 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.0 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.0 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.0 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.0 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.0 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.0 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.0 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.0 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.0 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.0 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.0 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
<PAGE> 34
CLASS A-5
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Morgan Guaranty Trust Company of New
York ("MGTNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means MGTNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate
Class A-5 Notes
Termination Date: July 25, 2002, subject to adjustment in
accordance with the Following Business Day
Convention
Notional Amount: For each Calculation Period, the Notional
Amount shall be the amount set forth in the
Schedule of Notional Amounts attached hereto as
Exhibit A with respect to the Class A-5 Notes
<PAGE> 35
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 5.967 %
Fixed Rate Payer: The first Period End Date will be July 25,
Period End Dates: 1997. Thereafter, the Period End Dates shall
be the 25th of October, January, April and
July up to and including the Termination Date,
with No Adjustment.
Fixed Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the United States Department of
the Treasury. If 91-day Treasury
<PAGE> 36
Bills are not auctioned during any period of
seven consecutive calendar days ending on and
including any Friday and a Reset Date would
have occurred if such 91-day Treasury Bills
had been auctioned during that seven day
period, then the rate for the Reset Date will
be the T-Bill Rate in effect as a result of
the last such auction and will remain in
effect until such time, if any, as the results
of the 91-day Treasury Bills shall again be so
published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday or a
day on which national banking associations or
banking institutions or trust companies in New
York, New York are authorized or obligated by
law to be closed.
Calculation Agent: MGTNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Please provide
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The offices of Party A for this Transaction are New York and London.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
<PAGE> 37
Very truly yours,
Morgan Guaranty Trust Company of New York
By: /s/ Patricia A. Carlo
------------------------
Name: Patricia A. Carlo
Title: Associate
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN TRUST I
By: The First National Bank of Chicago, not in its
individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
---------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 38
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.00 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.00 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.00 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.00 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.00 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.00 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.00 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.00 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.00 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.00 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.00 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.00 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.00 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.00 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
<PAGE> 40
CLASS A-7
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Morgan Guaranty Trust Company of New
York ("MGTNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means MGTNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate
Class A-7 Notes
Termination Date: July 25, 2006, subject to adjustment in
accordance with the Following Business Day
Convention
Notional Amount: For each Calculation Period, the Notional
Amount shall be the amount set forth in the
Schedule of Notional Amounts attached hereto
as Exhibit A with respect to the Class A-7
Notes
<PAGE> 41
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 6.110 %
Fixed Rate Payer
Period End Dates: The first Period End Date will be July 25,
1997. Thereafter, the Period End Dates shall
be the 25th of October, January, April and
July up to and including the Termination Date,
with No Adjustment.
Fixed Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate for initial
Calculation Period To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the
<PAGE> 42
United States Department of the Treasury. If
91-day Treasury Bills are not auctioned during
any period of seven consecutive calendar days
ending on and including any Friday and a Reset
Date would have occurred if such 91-day
Treasury Bills had been auctioned during that
seven day period, then the rate for the Reset
Date will be the T-Bill Rate in effect as a
result of the last such auction and will
remain in effect until such time, if any, as
the results of the 91-day Treasury Bills shall
again be so published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday or a
day on which national banking associations or
banking institutions or trust companies in New
York, New York are authorized or obligated by
law to be closed.
Calculation Agent: MGTNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Please provide
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The offices of Party A for this Transaction are New York and London.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
<PAGE> 43
Very truly yours,
Morgan Guaranty Trust Company of New York
By: /s/ Patricia A. Carlo
------------------------
Name: Patricia A. Carlo
Title: Associate
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN TRUST I
By: The First National Bank of Chicago, not in its
individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
---------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 44
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.00 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.00 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.00 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.00 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.00 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.00 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.00 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.00 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.00 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.00 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.00 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.00 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.00 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.00 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
<PAGE> 1
Exhibit 4.7
(Multicurrency--Cross Border)
LOGO
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 20, 1997
--------------------
Deutsche Bank AG-New York Branch and PNC Student Loan Trust I
-------------------------------- ---------------------------
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required
currency. Where settlement is by delivery (that is, other than by payment),
such delivery will be made for receipt on the due date in the manner
customary for the relevant obligation unless otherwise specified in the
relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
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(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted
or withheld from any additional amount paid by X or Y under this Section
2(d)) promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or
other documentation reasonably acceptable to Y, evidencing such payment
to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount actually
received by Y (free and clear of Indemnifiable Taxes, whether assessed
against X or Y) will equal the full amount Y would have received had no
such deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that it would
not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f)
to be accurate and true unless such failure would not have occurred
but for (I) any action taken by a taxing authority, or brought in a
court of competent jurisdiction, on or after the date on which a
Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
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(ii) LIABILITY, IF:--
(1) X is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, to make any deduction or
withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, as the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorize such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law)).
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(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and to
be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
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organised, managed and controlled, or considered to have its seat, or in which
a branch or office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction") and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in respect of
the other party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with
or performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party in
this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or
deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
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described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice requirement or
grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2)becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of
any such proceeding or petition instituted or presented against
it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or
the making of an order for its winding-up or liquidation or (B) is
not dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5) has
a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation
or merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it become unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
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6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(I), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its right
to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its right and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or
a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the case
of a Credit Event Upon Merger or an Additional Termination Event if
there is only one Affected Party may, by not more than 20 days notice to
the other party and provided that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving details
of the relevant account to which any amount payable to it is to be paid.
In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence
and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, form (and including) the
relevant Early Termination Date to (but excluding) the date such amount
is paid, at the Applicable Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment
method, either the "First Method" or the "Second Method". If the parties fail
to designate a payment measure or payment method in the Schedule, it will be
deemed that "Market Quotation" or the "Section Method", as the case may be,
shall apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive number, the Defaulting Party
will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's Loss
in respect of this Agreement. If that amount is a positive number,
the Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3),
if Market Quotation applies, or Section 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting
Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will
be subject to such adjustments as are appropriate and permitted by law
to reflect any payments or deliveries made by one party to the other
under this Agreement (and retained by such other party) during the
period from the relevant Early Termination Date to the date for payment
determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security of otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith converting the currency so tendered into the Contractual Currency,
of the full amount in the Contractual Currency of all amounts payable in respect
of this Agreement. If for any reason the amount in the Contractual Currency so
received falls short of the amount in the Contractual Currency payable in
respect of this Agreement, the party required to make the payment will, to the
extent permitted by applicable law, immediately pay such additional amount in
the Contractual Currency as may be necessary to compensate for the shortfall. If
for any reason the amount in the Contractual Currency so received exceeds the
amount in the Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results form any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts (including
by facsimile transmission) or be created by an exchange of telexes or by
an exchange of electronic messages on an electronic messaging system,
which in each case will be sufficient for all purposes to evidence a
binding supplement to this Agreement. The parties will specify therein
or through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the laws
of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
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reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE INN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, actin, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified
as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
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"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have
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been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
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"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect to any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the sport exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
<PAGE> 18
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
DEUTSCHE BANK AG-NEW YORK PNC STUDENT LOAN TRUST I
BRANCH
By: /S/ Gayma Z. Shivnarain By: The First National Bank of Chicago,
-------------------------- not in its individual capacity, but
Name: Gayma Z. Shivnarain solely in its capacity as Eligible
Title: Vice President Lender Trustee for PNC Student Loan
Date: June 25, 1997 Trust I
By: /s/Peter Nerby By: /s/ Steve M. Husbands
-------------------------- ------------------------------
Name: Peter Nerby Name: Steve M. Husbands
Title: Director Title: Assistant Vice President
Date: June 25, 1997 Date: June 25, 1997
18
<PAGE> 19
EXECUTION COPY
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of June 20, 1997
between
Deutsche Bank, AG and PNC Student Loan Trust I
New York Branch (the "Counterparty")
("Deutsche Bank")
PART 1
TERMINATION PROVISIONS
In this Agreement:-
(1) "Specified Entity" shall not apply.
(2) "Specified Transaction" will have the meaning specified in Section 14.
(3) The "Cross Default" provisions of Section 5(a)(vi) will not apply to
Deutsche Bank or the Counterparty.
(4) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Deutsche Bank or the Counterparty.
(5) For purposes of computing amounts payable on early termination:
(a) Market Quotation will apply to this Agreement; and
(b) The Second Method will apply to this Agreement;
provided, however, that in the case of an Event of Default with
respect to Deutsche Bank as the Defaulting Party or a Termination
Event with respect to Deutsche Bank as the
<PAGE> 20
-2-
Affected Party, the related Settlement Amount, if negative, will be
deemed to be zero if the Market Quotation cannot be determined.
(6) MARKET QUOTATION. Notwithstanding anything to the contrary in the
definition of Market Quotation in Section 14, in the case of an Event
of Default with respect to Deutsche Bank as the Defaulting Party or a
Termination Event with Deutsche Bank as the Affected Party, the Market
Quotation, if Negative, will be deemed to be the negative quotation,
if any, with the highest absolute value received from any Reference
Market-maker, even if only one quotation is provided, with which the
Counterparty is able, using its best efforts, to enter into a
Replacement Transaction even if the Counterparty reasonably believes
such Market Quotation would not produce a commercially reasonable
result.
(7) REFERENCE MARKET-MAKER. Will not have the meaning specified in Section
14, but will instead mean the following:
"Reference Market-maker" means five leading dealers in the
relevant market selected by the party determining the Market
Quotation in good faith (a) from among dealers which are
rated not lower than investment grade by Standard & Poor's
Rating Group ("S&P") and Moody's Investors Service, Inc.
("Moody's") which satisfy the criteria that such party
applies generally at that time in deciding whether to offer
or make an extension of credit and (b) to the extent
practicable, from among dealers having an office in the same
city."
(8) "Termination Currency" means United States Dollars.
(9) Section 5(a)(iii), Section 5(a)(iv), Section 5(a)(v), Section
5(b)(ii), Section 5(b)(iii) Section 5(b)(iv) of the Agreement are
hereby deleted.
(10) Section 5(a)(ii) and Section 5(a)(viii) shall not apply with respect
to the Counterparty.
PART 2
TAX REPRESENTATIONS
REPRESENTATIONS OF DEUTSCHE BANK
(1) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, Deutsche Bank hereby makes the following representation:
(i) It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make
<PAGE> 21
-3-
any deduction or withholding for or on account of any Tax
from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the Counterparty under
this Agreement. In making this representation, it may rely
on:
(a) the accuracy of any representations made by the
Counterparty pursuant to Section 3(f);
(b) the satisfaction of the agreement of the
Counterparty contained in Section 4(a)(i) or
4(a)(iii) and the accuracy and effectiveness of any
document provided by the Counterparty pursuant to
Section 4(a)(i) or 4(a)(iii); and
(c) the satisfaction of the agreement of the
Counterparty contained in Section 4(d), provided
that it shall not be a breach of this representation
where reliance is placed on clause (b) and the
Counterparty does not deliver a form or document
under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(2) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Deutsche Bank represents that it is a banking corporation
organized under the laws of the State of New York and is not a foreign
corporation within the meaning of Section 7701(a)(5) of the United
States Internal Revenue Code.
REPRESENTATIONS OF THE COUNTERPARTY
(1) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, the Counterparty hereby makes the following representation:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to Deutsche Bank under this
Agreement. In making this representation, it may rely on:
(a) the accuracy of any representation made by Deutsche
Bank pursuant to Section 3(f);
(b) the satisfaction of the agreement of Deutsche Bank
contained in Section 4(a)(i) or 4(a)(iii) and the
accuracy and effectiveness of any document provided
by Deutsche Bank pursuant to Section 4(a)(i) or
4(a)(iii); and
<PAGE> 22
-4-
(c) the satisfaction of the agreement of Deutsche Bank
contained in Section 4(d),
provided that it shall not be a breach of this representation where
reliance is placed on clause (b) and Deutsche Bank does not deliver a
form or document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(2) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, the Counterparty represents that it is a business trust
organized under the laws of the State of Delaware.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and (ii), each party agrees to deliver the
following documents, as applicable:
(1) Deutsche Bank will, on upon execution of this Agreement, deliver a
certificate (or, if available, the current authorized signature book
of Deutsche Bank) specifying the names, title and specimen signatures
of the persons authorized to execute this Agreement and each
Confirmation on its behalf.
(2) Deutsche Bank will, upon execution of this Agreement, deliver opinions
of counsel to Deutsche Bank substantially in the form of Exhibit A and
Exhibit B hereto.
(3) Deutsche Bank will, within 30 days of the execution of this Agreement,
but in no event later than the date of the first payment made by the
Counterparty to Deutsche Bank in connection with this Agreement and
additionally, prior to the date on which the first payment is to be
made by the Counterparty with respect to each succeeding calendar year
and within the earlier of (i) 30 days of a change in circumstances
that renders the forms previously delivered to the Counterparty
inaccurate or incomplete in any material respect or (ii) the first
Counterparty Floating Amount Payment Date which falls after a change
in circumstances that renders the forms previously delivered to the
Counterparty inaccurate or incomplete in any material respect, two
accurate and completed signed copies of Internal Revenue Service Form
4224 (including any certificate thereto) as the Counterparty may
reasonably request.
(4) The Counterparty will, on demand, deliver a certificate (or, if
available, the current authorized signature book of the Counterparty)
specifying the names, title and specimen
<PAGE> 23
-5-
signatures of the persons authorized to execute this Agreement and
each Confirmation on its behalf.
(5) The Counterparty will upon execution of this Agreement deliver a fully
executed Trust Agreement dated as of March 27, 1997 among PNC Bank,
National Association, The First National Bank of Chicago and First
Chicago Delaware, Inc., as Delaware trustee (the "Trust Agreement").
(6) The Counterparty will upon execution of this Agreement deliver a legal
opinion of counsel in form and substance satisfactory to Deutsche Bank
regarding this agreement and any other matters as Deutsche Bank may
reasonably request.
(7) The Counterparty will, upon request, deliver a copy of each statement
required to be delivered to holders of the notes to which each
transaction hereunder relates.
Each of the foregoing documents, with the exception of the opinions delivered
pursuant to paragraphs (2) and (6) above, is covered by the representation
contained in Section 3(d) of this Agreement.
PART 4
MISCELLANEOUS
(1) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law doctrine.
(2) NOTICES.
(a) In connection with Section 12(a), all notices to Deutsche
Bank shall, with respect to any particular Transaction, be
sent to the address, telex number or facsimile number
specified in the relevant Confirmation and any notice for
purposes of Sections 5 or 6 of the Agreement shall be sent to
the address or telex number specified below:
Deutsche Bank AG,
New York Branch
31 West 52nd Street
New York, New York 10019
Attention: Greg Williams
Telephone No.: (212) 469-7645
Facsimile No.: (212) 469-7875
<PAGE> 24
-6-
(b) In connection with Section 12(a), all notices to the
Counterparty shall, with respect to any particular
Transaction, be sent to the address, telex number or
facsimile number specified in the relevant Confirmation and
any notice for purposes of Sections 5 or 6 of the Agreement
shall be sent to the address or telex number specified below:
PNC Student Loan Trust I
c/o The First National Bank of Chicago,
as Eligible Lender Trustee
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Attention: Larry Dillard
Facsimile No.: (312) 407-1708
(3) NETTING OF PAYMENTS. Section 2(c)(ii) of this Agreement will not apply
with respect to all Transactions under this Agreement, with the result
that a net payment amount will be determined in respect of all amounts
payable on the same date in the same currency in respect of two or
more transactions.
(4) OFFICES; MULTIBRANCH PARTY. For purposes of Section 10:
(a) Section 10(a) will apply; and
(b) For the purpose of Section 10(c):
(i) Deutsche Bank is not a Multibranch Party.
(ii) The Counterparty is not a Multibranch Party.
(5) CREDIT SUPPORT DOCUMENTS.
Not applicable.
(6) CREDIT SUPPORT PROVIDER.
Not applicable.
PART 5
OTHER PROVISIONS
<PAGE> 25
-7-
(1) ISDA DEFINITIONS. Reference is hereby made to the 1991 ISDA
Definitions (the "1991 Definitions") and the 1992 ISDA FX and Currency
Option Definitions (the "FX Definitions"), each as published by the
International Swap Dealers Association, Inc., which are hereby
incorporated by reference herein. Any terms used and not otherwise
defined herein which are contained in the 1991 Definitions or the FX
Definitions shall have the meaning set forth therein.
(2) SCOPE OF AGREEMENT. Notwithstanding anything contained in the
Agreement to the contrary, if the parties enter into any Specified
Transaction, such Specified Transaction shall be subject to, governed
by and construed in accordance with the terms of this Agreement unless
the Confirmation relating thereto shall specifically state to the
contrary. Each such Specified Transaction shall be a Transaction for
the purposes of this Agreement.
(3) INCONSISTENCY. In the event of any inconsistency between any of the
following documents, the relevant document first listed below shall
govern: (i) a Confirmation; (ii) the Schedule; (iii) the 1991
Definitions or the FX Definitions; and (iv) the printed form of ISDA
Master Agreement.
(4) NON-PETITION. Deutsche Bank hereby agrees that it will not being any
action (whether in bankruptcy or otherwise) against the Counterparty
in any court prior to the date which is one year and one day after all
Noteholders (as defined in the Trust Agreement) have been paid in
full.
(5) CALCULATION AGENT. The Calculation Agent will be Deutsche Bank.
(6) WAIVER OF JURY TRIAL. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Agreement or any Credit Support Document. Each party (i) certifies
that no representative, agent or attorney of the other party or any
Credit Support Provider has represented, expressly or otherwise, that
such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Agreement and provide for any Credit Support Document, as applicable,
by, among other things, the mutual waivers and certifications in this
Section.
(7) SEVERABILITY. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal, or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired thereby. The parties shall endeavor, in good faith
negotiations, to replace the invalid, illegal or unenforceable
provisions with valid provisions the
<PAGE> 26
-8-
economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
(8) NO GROSS-UP FOR COUNTERPARTY. Section 2(d) of the Agreement shall not
apply with respect to the Counterparty so that the Counterparty shall
not be obligated to gross up pursuant thereto.
(9) ASSIGNMENT. In the event the long-term, senior, unsecured debt
obligations of Deutsche Bank are lowered below the category of "AAA"
by S&P or Fitch, or "Aa1" by Moody's or such rating agencies' then
equivalent rating, or such ratings are withdrawn by S&P, Moody's, or
Fitch and the Master Servicer shall have determined in consultation
with any of the rating agencies that after giving effect to Deutsche
Bank's then current ratings, the continuation of Deutsche Bank as a
swap provider will result in the reduction or withdrawal of the then
current rating of any class of Class A Notes by such rating agency,
Deutsche Bank shall assign and delegate its rights and obligations
under any Transaction to a replacement swap provider, subject to the
prior written direction of the Counterparty; provided, however, that
such assignment will not be required if within 10 Business Days of
receipt of such prior written direction of the Counterparty, the
Counterparty and the Master Servicer receive written confirmation from
such rating agency that after giving effect to Deutsche Bank's then
current ratings and any other arrangement satisfactory to the rating
agencies, the continuation of Deutsche Bank as a swap counterparty
hereunder shall not cause the withdrawal or reduction of the rating of
any class of Class A Notes below their then current rating by such
rating agency. If such assignment is required, the assignment shall be
deemed to be a Termination Event with Deutsche Bank as the Affected
Party.
(10) SCOPE OF TRUSTEE'S OBLIGATIONS. The Trustee shall not be required to
expend or risk its own funds or otherwise incur any liability in
connection with this Agreement, and Deutsche Bank shall not bring any
claim against the Trustee in its individual capacity or against the
assets of the Trustee hereunder (other than assets of the Trust)
except for such claims arising as a result of the negligence or wilful
misconduct of the Trustee.
(11) RELATIONSHIP BETWEEN PARTIES. Each party will be deemed to represent
to the other party on the date on which it enters into a Transaction
that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction):
(a) NON-RELIANCE. It is acting for its own account, and it has
made its own independent decisions to enter into that
Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgment and upon advice
from such advisors as it has deemed necessary. It is not
relying on any communication (written or oral) of the other
party as investment advice or as a
<PAGE> 27
-9-
recommendation to enter into that Transaction; it being
understood that information and explanations related to the
terms and conditions of a Transaction shall not be considered
investment advice or a recommendation to enter into that
Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.
(b) EVALUATION AND UNDERSTANDING. It is capable of assessing the
merits of and evaluating and understanding (on its own behalf
or through independent professional advice), and understands
and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the
financial and other risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or an advisor to it in respect of that
Transaction.
<PAGE> 28
-10-
Please confirm your agreement to the terms of the foregoing Schedule
by signing below.
DEUTSCHE BANK AG,
NEW YORK BRANCH
By: /s/ Gayma Z. Shivnarain
-------------------------
Name: Gayma Z. Shivnarain
Title: Vice President
PNC STUDENT LOAN TRUST I
By: The First National Bank of Chicago,
not in its individual capacity, but solely
in its capacity as Eligible Lender Trustee for
PNC Student Loan Trust I
By: /s/ Steve M. Husbands
--------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 29
CLASS A-3
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Deutsche Bank AG, New York Branch
("DBNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means DBNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate
Class A-3 Notes
Termination Date: July 25, 2000, subject to adjustment in
accordance with the Following Business Day
Convention
Notional Amount: For each Calculation Period, the Notional
Amount shall be the amount set forth in the
Schedule of Notional Amounts attached hereto
as Exhibit A with respect to the Class A-3
Notes
<PAGE> 30
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 5.782 %
Fixed Rate Payer
Period End Dates: The first Period End Date will be July 25,
1997. Thereafter, the Period End Dates shall be
the 25th of October, January, April and July up
to and including the Termination Date, with No
Adjustment
Fixed Rate Payer
Payment Dates: The first Payment Date will be July 25,
1997. Thereafter, the Payment Dates shall be
the 25th of October, January, April and July
up to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the
<PAGE> 31
United States Department of the Treasury. If
91-day Treasury Bills are not auctioned during
any period of seven consecutive calendar days
ending on and including any Friday and a Reset
Date would have occurred if such 91-day
Treasury Bills had been auctioned during that
seven day period, then the rate for the Reset
Date will be the T-Bill Rate in effect as a
result of the last such auction and will
remain in effect until such time, if any, as
the results of the 91-day Treasury Bills shall
again be so published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday or a
day on which national banking associations or
banking institutions or trust companies in New
York, New York are authorized or obligated by
law to be closed.
Calculation Agent: DBNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Federal Reserve Bank of New York
Account Name: Deutsche Bank AG -
New York Branch
ABA Routing No.: 0260-0370
Ref.: Interest Rate Swaps
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The office of Party A for this Transaction is New York.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
<PAGE> 32
Very truly yours,
Deutsche Bank AG, New York Branch
By: /s/ Steven Horn
-------------------------------------
Name: Steven Horn
Title: Attorney-in-fact
By: /s/ Todd Knezovic
-------------------------------------
Name: Todd Knezovic
Title: Attorney-in-fact
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN I
By: The First National Bank of Chicago, not in
its individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
--------------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 33
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.00 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.00 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.00 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.00 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.00 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.00 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.00 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.00 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.00 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.00 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.00 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.00 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.00 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.00 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
<PAGE> 35
CLASS A-4
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Deutsche Bank AG, New York Branch
("DBNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means DBNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate
Class A-4 Notes
Termination Date: July 25, 2001, subject to adjustment in
accordance with the Following Business Day
Convention
Notional Amount: For each Calculation Period, the Notional
Amount shall be the amount set forth in the
Schedule of Notional Amounts attached hereto as
Exhibit A with respect to the Class A-4 Notes
<PAGE> 36
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 5.888 %
Fixed Rate Payer
Period End Dates: The first Period End Date will be July 25,
1997. Thereafter, the Period End Dates shall
be the 25th of October, January, April and
July up to and including the Termination Date,
with No Adjustment.
Fixed Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the
<PAGE> 37
United States Department of the Treasury. If
91-day Treasury Bills are not auctioned during
any period of seven consecutive calendar days
ending on and including any Friday and a Reset
Date would have occurred if such 91-day
Treasury Bills had been auctioned during that
seven day period, then the rate for the Reset
Date will be the T-Bill Rate in effect as a
result of the last such auction and will
remain in effect until such time, if any, as
the results of the 91-day Treasury Bills shall
again be so published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday or a
day on which national banking associations or
banking institutions or trust companies in New
York, New York are authorized or obligated by
law to be closed.
Calculation Agent: DBNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Federal Reserve Bank of New York
Account Name: Deutsche Bank AG -
New York Branch
ABA Routing No.: 0260-0370
Ref.: Interest Rate Swaps
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The office of Party A for this Transaction is New York.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
<PAGE> 38
Very truly yours,
Deutsche Bank AG, New York Branch
By: /s/ Steven Horn
---------------------------------
Name: Steven Horn
Title: Attorney-in-fact
By: /s/ Todd Knezovic
---------------------------------
Name: Todd Knezovic
Title: Attorney-in-fact
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN I
By: The First National Bank of Chicago, not in
its individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
-------------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 39
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.00 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.00 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.00 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.00 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.00 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.00 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.00 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.00 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.00 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.00 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.00 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.00 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.00 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.00 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
<PAGE> 41
CLASS A-6
PNC Student Loan Trust I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the trade date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below. This
Confirmation supplements, forms a part of and is subject to the 1992 ISDA
Master Agreement (the "Agreement") among Deutsche Bank AG, New York Branch
("DBNY") and The First National Bank of Chicago (the "Trustee"), not
individually, but solely in its capacity as Eligible Lender Trustee for the PNC
Student Loan Trust I dated as of June 20, 1997.
1. DEFINITIONS. This Confirmation and the Schedule to the Agreement
(the "Schedule") each incorporate the definitions and provisions contained in
(i) the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions") and (ii) the prospectus
which forms a part of the registration statement (together with all amendments
and exhibits thereto, the Registration Statement") filed by PNC Bank, National
Association in its capacity as depositor of the PNC Student Loan Trust I (the
"Prospectus"). In the event of any inconsistency between the definitions in the
Prospectus and any of the Definitions, the Schedule or this Confirmation, the
definitions in the Prospectus will govern; in the event of any inconsistency
between this Confirmation and either the Schedule or the Definitions, this
Confirmation will govern; and in the event of any inconsistency between the
Schedule and the Definitions, the Schedule will govern. In this Confirmation,
"Party A" means DBNY and "Party B" means the Trustee.
2. SUMMARY OF TRANSACTION TERMS. The terms of the particular
Transaction to which this Confirmation relates are as follows:
Trade Date: June 20, 1997
Effective Date: The Closing Date for the Senior Fixed Rate
Class A-6 Notes
Termination Date: July 25, 2003, subject to adjustment in
accordance with the Following Business Day
Convention
Notional Amount: For each Calculation Period, the Notional
Amount shall be the amount set forth in the
Schedule of Notional Amounts attached hereto
as Exhibit A with respect to the Class A-6
Notes
<PAGE> 42
Fixed Amounts
Fixed Rate Payer: Party A
Fixed Rate: 6.022 %
Fixed Rate Payer
Period End Dates: The first Period End Date will be July 25,
1997. Thereafter, the Period End Dates shall
be the 25th of October, January, April and
July up to and including the Termination Date,
with No Adjustment.
Fixed Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party B
Floating Rate Payer
Payment Dates: The first Payment Date will be July 25, 1997.
Thereafter, the Payment Dates shall be the
25th of October, January, April and July up to
and including the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Option: The Rate determined by the Master Servicer on
each Reset Date at which United States
Treasury Bills with a maturity of 13 weeks
("91-day Treasury Bills") are auctioned as set
forth in H.15 (519) for the day opposite such
maturity under the caption "U.S. Government
Securities/Treasury Bills/Auction Average
(Investment)" (the "T-Bill Rate"). If on any
Reset Date 91-day Treasury Bills have been
auctioned on a Reset Date but such rate for
such Reset Date is not yet published in H.15
(519), the rate for such Reset Date will be
the bond equivalent yield of the auction
average rate for those Treasury Bills as
announced by the
<PAGE> 43
United States Department of the Treasury. If
91-day Treasury Bills are not auctioned during
any period of seven consecutive calendar days
ending on and including any Friday and a Reset
Date would have occurred if such 91-day
Treasury Bills had been auctioned during that
seven day period, then the rate for the Reset
Date will be the T-Bill Rate in effect as a
result of the last such auction and will
remain in effect until such time, if any, as
the results of the 91-day Treasury Bills shall
again be so published or such auction is held.
Spread: None
Floating Rate Day
Count Fraction: Actual/Actual
Reset Dates: Each weekly auction date of 91-day United
States Treasury Bills during each Calculation
Period
Method of Averaging: Unweighted
Business Day: Any day other than a Saturday, a Sunday or a
day on which national banking associations or
banking institutions or trust companies in New
York, New York are authorized or obligated by
law to be closed.
Calculation Agent: DBNY
3. ACCOUNT DETAILS.
Payments to Party A
Account for payments in USD: Federal Reserve Bank of New York
Account Name: Deutsche Bank AG -
New York Branch
ABA Routing No.: 0260-0370
Ref.: Interest Rate Swaps
Payments to Party B:
Account for payments in USD: Please provide
4. OFFICES.
The office of Party A for this Transaction is New York.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this confirmation enclosed for that
purpose and returning it to us.
<PAGE> 44
Very truly yours,
Deutsche Bank AG, New York Branch
By: /s/ Steven Horn
------------------------------
Name: Steven Horn
Title: Attorney-in-fact
By: /s/ Todd Knezovic
------------------------------
Name: Todd Knezovic
Title: Attorney-in-fact
Accepted and Agreed as of the date first written above:
PNC STUDENT LOAN I
By: The First National Bank of Chicago, not in
its individual capacity, but solely in its capacity
as Eligible Lender Trustee for PNC Student Loan Trust I
By: /s/ Steve M. Husbands
-------------------------------
Name: Steve M. Husbands
Title: Assistant Vice President
<PAGE> 45
EXHIBIT A
SCHEDULE OF NOTIONAL AMOUNTS
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
06/25/1997 07/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1997 10/25/1997 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1997 01/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1998 04/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1998 07/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1998 10/25/1998 107,000,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1998 01/25/1999 79,130,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/1999 04/25/1999 50,740,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/1999 07/25/1999 25,565,000 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/1999 10/25/1999 0.00 107,000,000 102,000,000 94,000,000 72,500,000 121,000,000
10/25/1999 01/25/2000 0.00 78,000,000 102,000,000 94,000,000 72,500,000 121,000,000
01/25/2000 04/25/2000 0.00 52,000,000 102,000,000 94,000,000 72,500,000 121,000,000
04/25/2000 07/25/2000 0.00 26,000,000 102,000,000 94,000,000 72,500,000 121,000,000
07/25/2000 10/25/2000 0.00 0.00 102,000,000 94,000,000 72,500,000 121,000,000
10/25/2000 01/25/2001 0.00 0.00 76,500,000 94,000,000 72,500,000 121,000,000
01/25/2001 04/25/2001 0.00 0.00 51,000,000 94,000,000 72,500,000 121,000,000
04/25/2001 07/25/2001 0.00 0.00 25,500,000 94,000,000 72,500,000 121,000,000
07/25/2001 10/25/2001 0.00 0.00 0.00 94,000,000 72,500,000 121,000,000
10/25/2001 01/25/2002 0.00 0.00 0.00 69,000,000 72,500,000 121,000,000
01/25/2002 04/25/2002 0.00 0.00 0.00 44,500,000 72,500,000 121,000,000
04/25/2002 07/25/2002 0.00 0.00 0.00 21,500,000 72,500,000 121,000,000
07/25/2002 10/25/2002 0.00 0.00 0.00 0.00 72,500,000 121,000,000
10/25/2002 01/25/2003 0.00 0.00 0.00 0.00 52,500,000 121,000,000
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
For the Period
Commencing on, To, but Class Class Class Class Class Class
and Including Excluding A-2 A-3 A-4 A-5 A-6 A-7
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/25/2003 04/25/2003 0.00 0.00 0.00 0.00 33,500,000 121,000,000
04/25/2003 07/25/2003 0.00 0.00 0.00 0.00 16,000,000 121,000,000
07/25/2003 10/25/2003 0.00 0.00 0.00 0.00 0.00 121,000,000
10/25/2003 01/25/2004 0.00 0.00 0.00 0.00 0.00 106,000,000
01/25/2004 04/25/2004 0.00 0.00 0.00 0.00 0.00 92,000,000
04/25/2004 07/25/2004 0.00 0.00 0.00 0.00 0.00 79,000,000
07/25/2004 10/25/2004 0.00 0.00 0.00 0.00 0.00 67,000,000
10/25/2004 01/25/2005 0.00 0.00 0.00 0.00 0.00 56,000,000
01/25/2005 04/25/2005 0.00 0.00 0.00 0.00 0.00 46,000,000
04/25/2005 07/25/2005 0.00 0.00 0.00 0.00 0.00 36,500,000
07/25/2005 10/25/2005 0.00 0.00 0.00 0.00 0.00 28,000,000
10/25/2005 01/25/2006 0.00 0.00 0.00 0.00 0.00 20,000,000
01/25/2006 04/25/2006 0.00 0.00 0.00 0.00 0.00 12,500,000
04/25/2006 07/25/2006 0.00 0.00 0.00 0.00 0.00 6,000,000
07/25/2006 10/25/2006 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
All amounts are in U.S. Dollars. All dates herein are subject to adjustment in
accordance with the Following Business Day Convention.
