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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 3, 1997
THE NATIONAL COLLEGIATE TRUST 1997-S2 (as issuer under the Indenture, dated as
of November 1, 1997, providing for the issuance of 7.24% Collateralized Student
Loan Bonds, Series 1997-S2)
The National Collegiate Trust 1997-S2
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(Exact name of Issuer as specified in its charter)
Delaware 33-63616 06-6454498
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
c/o Delaware Trust Capital Management, Inc.
900 Market Street
Wilmington, Delaware 19801
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (302) 421-7748
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
Description of the Bonds and the Student Loan Pool
On December 3, 1997, one series of bonds, entitled 7.24% Collateralized
Student Loan Bonds, Series 1997-S2(the "Bonds") were issued pursuant to an
indenture (the "Indenture") attached hereto as Exhibit 4.1, dated as of November
1, 1997, between Delaware Trust Capital Management, Inc., as owner trustee for
The National Collegiate Trust 1997-S2 (the "Issuer"), and State Street Bank and
Trust Company, as indenture trustee (the "Trustee"). The Bonds are
collateralized by a pool of student loans (the "Student Loans") made to students
at the educational institutions identified below (the "Owner Participants") that
hold the beneficial ownership interests in the Issuer. The Student Loans were
purchased by the Issuer directly from either BankBoston, NA or Bank of America
National Association, as indicated below, simultaneously with the closing for
the sale of the Bonds. The trust estate of the Issuer (the "Trust Estate")
consists primarily of 3,471 Student Loans with an initial aggregate principal
amount as of December 3, 1997 of $7,430,288. The following is a list of the
Owner Participants whose students are borrowers of the Student Loans held by the
Issuer, together with the percentage of their ownership interest in the Issuer:
<TABLE>
<CAPTION>
NAME OF INSTITUTION PERCENTAGE INTEREST ORIGINATOR
- ------------------- ------------------- ----------
<S> <C> <C>
Albright College 1.41% BankBoston, NA
Allegheny College 1.00% BankBoston, NA
Babson College 0.03% BankBoston, NA
Beaver College 1.39% BankBoston, NA
Bryant College 1.09% BankBoston, NA
Clarkson University 21.19% BankBoston, NA
Daniel Webster College 2.16% BankBoston, NA
Elmira College 2.95% BankBoston, NA
Embry-Riddle Aeronaut University 2.09% BankBoston, NA
Franciscan University of Steubenville 1.71% BankBoston, NA
Franklin Pierce College 3.81% BankBoston, NA
Geneva College 0.09% BankBoston, NA
Hartwick College 19.58% BankBoston, NA
Illinois Institute of Technology 0.46% Bank of America National Association
Kings College 0.05% BankBoston, NA
Linfield College 0.30% Bank of America National Association
Lycoming College 1.49% BankBoston, NA
Mount Ida College 0.39% BankBoston, NA
Oglethorpe University 0.17% BankBoston, NA
Pepperdine University 11.03% Bank of America National Association
Pt. Loma Nazarene College 8.44% Bank of America National Association
Presbyterian College 1.44% BankBoston, NA
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Roger Williams University 3.18% BankBoston, NA
St. Anselm College 6.58% BankBoston, NA
Santa Clara University 3.28% Bank of America National Association
Tulane University 0.52% BankBoston, NA
Utica College 2.13% BankBoston, NA
Wesleyan College 2.03% BankBoston, NA
</TABLE>
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The Bonds were sold by the Issuer to BancAmerica Securities, Inc. (the
"Underwriter") pursuant to a Master Underwriting Agreement, dated as of April 3,
1996, between The National Collegiate Trust (the "Depositor") and the
Underwriter, and the Terms Agreement, dated November 25, 1997, among the
Depositor, the Issuer and the Underwriter, attached hereto as Exhibit 1.1.
The Bonds will bear a fixed interest rate from the Closing Date of
7.24% per annum until the principal amount of the Bonds is paid in full, as more
fully described in the Indenture. Interest on the Bonds will be payable
semiannually on the 20th day of each March and September, or, if such 20th day
is not a Business Day, on the first Business Day thereafter, commencing on March
20, 1998 (each an "Interest Payment Date"). Interest is payable on the Bonds in
an amount equal to the interest accrued on the unpaid principal amount of Bonds
during the six-month period (or for the initial Interest Payment Date, the
period commencing with the Closing Date) ending on the last day preceding each
such Interest Payment Date. In addition, as more fully described in the
Indenture, principal payments on the Bonds will be payable semiannually on the
20th day of each March and September, or, if such 20th day is not a Business
Day, on the first Business Day thereafter, commencing on September 20, 2001
(each, a "Principal Payment Date"; together with the related Interest Payment
Date, a "Payment Date"). The Stated Maturity Date for the Bonds will be on the
Payment Date in September 2014, the latest scheduled maturity date of the
Student Loans pledged to secure the Bonds.
Capitalized terms used in this Item 2 hereof and not otherwise defined
shall have the meanings assigned to them in the Indenture.
Items 1, 3, 4, 5, 6 and 8 are not included because they are not
applicable.
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Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
1.1 Terms Agreement, dated November 25, 1997, among The
National Collegiate Trust as Depositor, the Issuer and the Underwriter.
3(i) Trust Agreement, dated as of November 1, 1997, between
Delaware Trust Capital Management, Inc. and The National Collegiate Trust
1997-S2.
4.1 Indenture, dated as of November 1, 1997, between Delaware
Trust Capital Management, Inc., as owner trustee for The National Collegiate
Trust 1997-S2, and State Street Bank and Trust Company, as indenture trustee.
10.1 Administration Agreement, dated as of November 1, 1997,
among the Issuer, Delaware Trust Capital Management, Inc., as owner trustee for
The National Collegiate Trust 1997-S2, State Street Bank and Trust Company, as
indenture trustee and First Marblehead Data Services Inc. as Administrator.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NATIONAL COLLEGIATE TRUST
1997-S2
By: DELAWARE TRUST CAPITAL
MANAGEMENT, INC., not in its
individual capacity but as Owner
Trustee
By: /s/ Richard N. Smith
--------------------------------------
Name: Richard N. Smith
Title: Vice President
Dated: December 4, 1997
<PAGE>
EXHIBITS TABLE
1.1 Terms Agreement, dated November 25, 1997, among The
National Collegiate Trust as Depositor, the Issuer and the Underwriter.
3(i) Trust Agreement, dated as of November 1, 1997, between
Delaware Trust Capital Management, Inc. and The National Collegiate Trust
1997-S2.
4.1 Indenture, dated as of November 1, 1997, between Delaware
Trust Capital Management, Inc., as owner trustee for The National Collegiate
Trust 1997-S2, and State Street Bank and Trust Company, as indenture trustee.
10.1 Administration Agreement, dated as of November 1, 1997,
among the Issuer, Delaware Trust Capital Management, Inc., as owner trustee for
The National Collegiate Trust 1997-S2, State Street Bank and Trust Company, as
indenture trustee and First Marblehead Data Services Inc. as Administrator.
EXHIBIT 1.1
<PAGE>
GATE(sm) RECEIVABLE ASSET-BACKED DEBT SECURITIES (GRADS(sm))
COLLATERALIZED STUDENT LOAN BONDS
SERIES 1997-S2
$8,250,000
TERMS AGREEMENT
Dated: November 25, 1997
To: The National Collegiate Trust (the "Company") and The National
Collegiate Trust 1997-S2 (the "Issuer")
Re: Underwriting Agreement dated as of April 3, 1996 (the "Agreement")
Series Designation: 7.45% Collateralized Student Loan Bonds, Series 1997-S2
Terms of the Bonds and Underwriting Compensation:
Original Interest Price to
Principal Amount Rate Public
---------------- ------ -------
$8,250,000 7.24% 100%
Certificate Ratings:
Moody's Aaa; Fitch AAA
Underwriting Fee:
1.15% of the original principal amount of the Series 1997-S2 Bonds issued.
.
Purchase Price:
$8,155,125
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Final Maturity:
September 20, 2014
Closing Date and Location:
December 3, 1997 at the office of Thacher Proffitt & Wood, New
York, New York.
The Issuer, the Company and the Underwriter hereby agree to
the terms of this Terms Agreement and to the terms of the Underwriting
Agreement, dated as of April 3, 1996, between the Company and
BancAmerica Securities, Inc.
THE NATIONAL COLLEGIATE TRUST 1997-S2
By: DELAWARE TRUST CAPITAL MANAGEMENT,
INC., not in its individual capacity,
but solely as Owner Trustee
By: /S/
--------------------------------------------
Name:
Title:
BANCAMERICA SECURITIES, INC.
By: /S/
--------------------------------------------
Name:
Title:
ACCEPTED:
THE NATIONAL COLLEGIATE TRUST
By: DELAWARE TRUST CAPITAL MANAGEMENT,
INC., not in its individual capacity,
but solely as Owner Trustee
By: /S/
--------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 3(i)
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THE NATIONAL COLLEGIATE TRUST 1997-S2
TRUST AGREEMENT
Between
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
as OWNER TRUSTEE
and
THE NATIONAL COLLEGIATE TRUST
as DEPOSITOR
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
ARTICLE I
DEFINITIONS...........................................................................................1
Section 1.01. CAPITALIZED TERMS......................................................................1
ARTICLE II
ORGANIZATION..........................................................................................9
Section 2.01. NAME...................................................................................9
Section 2.02. OFFICE................................................................................10
Section 2.03. PURPOSES AND POWERS...................................................................10
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE......................................................11
Section 2.05. DECLARATION OF TRUST..................................................................11
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST..................................................11
Section 2.07. SITUS OF TRUST........................................................................11
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST..........................................................12
Section 3.01. ISSUANCE OF TRUST CERTIFICATE.........................................................12
Section 3.02. REGISTRATION AND TRANSFER OF CERTIFICATES.............................................12
Section 3.03. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES.....................................13
Section 3.04. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS............................................13
Section 3.05. ASSIGNMENT OF RIGHT TO DISTRIBUTIONS..................................................14
ARTICLE IV
CONCERNING THE OWNERS................................................................................14
Section 4.01. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS......................................14
Section 4.02. ACTION UPON INSTRUCTIONS..............................................................15
Section 4.03. SUPER-MAJORITY CONTROL................................................................16
Section 4.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.......................................16
Section 4.05. POWER OF ATTORNEY.....................................................................16
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS............................................................17
Section 5.01. INVESTMENT OF TRUST FUNDS.............................................................17
Section 5.02. APPLICATION OF FUNDS..................................................................17
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI
CAPITAL..............................................................................................18
Section 6.01. TAX CHARACTERIZATION..................................................................18
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS.......................................................18
Section 6.03. CAPITAL ACCOUNTS......................................................................20
Section 6.04. INTEREST..............................................................................20
Section 6.05. OTHER ADDITIONAL CAPITAL CONTRIBUTIONS................................................20
Section 6.06. INVESTMENT OF CAPITAL CONTRIBUTIONS...................................................21
Section 6.07. REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS.........................................21
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS.........................................................21
Section 7.01. PROFIT................................................................................21
Section 7.02. LOSS..................................................................................22
Section 7.03. SPECIAL ALLOCATIONS...................................................................23
Section 7.04. CURATIVE ALLOCATIONS..................................................................25
Section 7.05. OTHER ALLOCATION RULES................................................................25
Section 7.06. DISTRIBUTION OF NET CASH FLOW.........................................................26
Section 7.07. DISTRIBUTION STATEMENT................................................................26
Section 7.08. ALLOCATION OF TAX LIABILITY...........................................................26
Section 7.09. METHOD OF PAYMENT.....................................................................27
Section 7.10. NO SEGREGATION OF FUNDS; NO INTEREST..................................................27
Section 7.11. INTERPRETATION AND APPLICATION OF PROVISIONS BY THE ADMINISTRATOR.....................27
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE............................................................27
Section 8.01. GENERAL AUTHORITY.....................................................................27
Section 8.02. SPECIFIC AUTHORITY....................................................................27
Section 8.03. GENERAL DUTIES........................................................................28
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL REVENUE SERVICE AND
OTHERS......................................................................................28
Section 8.05. SIGNATURE OF RETURNS..................................................................28
Section 8.06. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS...........................................28
Section 8.07. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN INSTRUCTIONS....................29
Section 8.08. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS............................29
Section 8.09. RESTRICTION...........................................................................29
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE IX
CONCERNING THE OWNER TRUSTEE.........................................................................30
Section 9.01. ACCEPTANCE OF TRUSTS AND DUTIES.......................................................30
Section 9.02. FURNISHING OF DOCUMENTS...............................................................31
Section 9.03. RELIANCE; ADVICE OF COUNSEL...........................................................31
Section 9.04. NOT ACTING IN INDIVIDUAL CAPACITY.....................................................31
ARTICLE X
COMPENSATION OF OWNER TRUSTEE........................................................................32
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES....................................................32
Section 10.02. INDEMNIFICATION......................................................................32
Section 10.03. LIEN ON TRUST PROPERTY...............................................................32
Section 10.04. PAYMENTS TO THE OWNER TRUSTEE........................................................32
ARTICLE XI
TERMINATION OF TRUST.................................................................................33
Section 11.01. TERMINATION OF TRUST.................................................................33
Section 11.02. DISTRIBUTION OF ASSETS...............................................................33
Section 11.03. NO TERMINATION BY DEPOSITOR OR OWNERS................................................34
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...............................................34
Section 12.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR...............................34
Section 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES.............................................35
ARTICLE XIII
TAX MATTERS PARTNER..................................................................................36
Section 13.01. TAX MATTERS PARTNER..................................................................36
Section 13.02. NOTICE OF TAX AUDIT..................................................................36
Section 13.03. AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX.........................................36
Section 13.04. CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT.................................36
Section 13.05. AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT.....................................36
Section 13.06. NOTICES SENT TO THE INTERNAL REVENUE SERVICE.........................................36
Section 13.07. INDEMNIFICATION OF TAX MATTERS PARTNER...............................................37
Section 13.08. APPROVAL OF TAX MATTERS PARTNER'S DECISIONS..........................................37
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 13.09. PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE ADMINISTRATIVE
PROCEEDINGS.................................................................................37
ARTICLE XIV
MISCELLANEOUS........................................................................................37
Section 14.01. SUPPLEMENTS AND AMENDMENTS...........................................................37
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER............................................37
Section 14.03. PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING.....................................38
Section 14.04. LIMITATIONS ON RIGHTS OF OTHERS......................................................38
Section 14.05. NOTICES..............................................................................38
Section 14.06. SEVERABILITY.........................................................................38
Section 14.07. SEPARATE COUNTERPARTS................................................................39
Section 14.08. SUCCESSORS AND ASSIGNS...............................................................39
Section 14.09. HEADINGS.............................................................................39
Section 14.10. GOVERNING LAW........................................................................39
Section 14.11. GENERAL INTERPRETIVE PRINCIPLES......................................................39
</TABLE>
EXHIBIT 1 FORM OF TRUST CERTIFICATE
EXHIBIT 2 FORM OF ACCESSION AGREEMENT
EXHIBIT 3 FORM OF CERTIFICATE OF TRUST
EXHIBIT 4 FEE SCHEDULE
<PAGE>
TRUST AGREEMENT, dated as of November 1, 1997, between The National
Collegiate Trust, a Delaware business trust (the "Depositor"), and Delaware
Trust Capital Management, Inc., a Delaware trust company (the "Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.01. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meaning set forth below:
"Administration Agreement" means the Administration Agreement,
dated as of November 1, 1997, among the Trust, the Indenture Trustee and First
Marblehead Data Services Inc., as Administrator, as it may be amended from time
to time.
"Administrator" means First Marblehead Data Services Inc., a
Delaware corporation, as Administrator under the Administration Agreement, or
any successor Administrator as appointed pursuant to the terms of the
Administration Agreement.
"Affiliate" 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.
"Agreement" means this Trust Agreement, as it may be amended
or restated from time to time.
"Allocable Bonds" means, as to any Owner, the then outstanding
aggregate principal balance of Bonds which are collateralized by such Owner's
Allocable Student Loans. The initial Allocable Bonds for each Owner are set
forth on Schedule A attached hereto. Thereafter, the Allocable Bonds as to any
Owner shall be determined by multiplying the then outstanding aggregate
principal balance of the Bonds by a percentage derived by dividing the initial
Allocable Bonds for such Owner by the initial aggregate principal balance of the
Bonds.
"Allocable Student Loans" means, as to any Owner, the then
outstanding aggregate principal balance of Student Loans originated by the
Originator and made to students who were attending or recently graduated from
such Owner. The initial Allocable Student Loans for each Owner are set forth on
Schedule A attached hereto.
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"Assignment of Servicing Agreement" means the Assignment of
Servicing Agreement, dated December 3, 1997, among the Owner, the Trust and the
Servicer, relating to the assignment of the Servicing Agreement to the Trust and
the Indenture Trustee.
"Authorized Officer" means any officer of the Owner Trustee
who is authorized to act for the Owner Trustee in matters relating to, and
binding upon, the Trust and whose name appears on a list of such authorized
officers furnished by the Owner Trustee as such list may be amended or
supplemented from time to time.
"Beneficial Interest" as to any Owner, means all or any part
of the interest of that Owner in the Trust, including without limitation its (i)
right to a distributive share of the Profit and Loss of the Trust, (ii) right to
a distributive share of the assets of the Trust, and (iii) right to direct or
consent to actions of the Owner Trustee and otherwise participate in the
management of and control the affairs of the Trust.
"Bonds" means collateralized student loan bonds to be issued
by the Trust pursuant to the Indenture.
"Bond Insurer" means MBIA Insurance Corporation.
"Business Day" means any day that is not a Saturday, Sunday or
any other day on which commercial banking institutions in Delaware are
authorized or obligated by law or executive order to be closed.
"Business Trust Statute" means the Delaware Business Trust
Act, 12 Del. Code ss.3801.
"Call Date" means any Payment Date for the Bonds.
"Capital Account" means the Capital Account maintained for
each Owner pursuant to Article VI of this Agreement.
"Capital Contribution" means the amount of money contributed
by an Owner to the capital of the Trust, which shall be deemed to be such
Owner's share of the Securitization Reserves (as defined in the Master
Securitization Agreement or the Note Purchase Agreement, as the case may be,
with respect to the related Originator) plus (i) the excess of the aggregate
principal balance of such Owner's Allocable Student Loans over the aggregate
principal balance of such Owner's Allocable Bonds as of the Closing Date, as set
forth on Schedule A to this Agreement, (ii) the amount of any Mandatory Capital
Contribution made by such Owner pursuant to this Agreement and (iii) the amount
of any Liquidity Capital Contribution made by such Owner pursuant to this
Agreement and not returned as provided herein.
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"Certificate of Trust" means the Certificate of Trust to be
filed with the Secretary of State by the Owner Trustee on behalf of the Trust
pursuant to Section 8.02.
"Closing Date" means December 3, 1997.
"Default Losses" means the losses described as such in Section
7.01(b)(i).
"Depositor" means The National Collegiate Trust, a Delaware
business trust.
"Distributions" means any money or other property distributed
to an Owner with respect to its Beneficial Interest.
"Distribution Date" means the first Business Day following a
day on which the Owner Trustee obtains receipt of funds or, if instructed by the
Owners, such other Business Day as they shall specify in writing.
"Distribution Date Statement" means the statement described as
such in Section 7.07.
"Eligible Investments" means one or more of the following:
(i) obligations of or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by the
Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution
or trust company; provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof has
been rated by the Rating Agency in its highest short-term rating
available; and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term
rating of such
<PAGE>
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institution shall have a credit rating in one of the two highest
applicable categories from the Rating Agency;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by the Rating Agency in its highest short-term rating
available; provided that such commercial paper shall have a remaining
maturity of not more than 30 days;
(v) a money market fund rated by the Rating Agency in its
highest rating available; and
(vi) other obligations or securities that are acceptable to
the Rating Agency as an Eligible Investment hereunder and will not
result in a reduction in the then current ratings of the Bonds, as
evidenced in writing;
provided, however, that no instrument shall be an Eligible Investment if it
represents either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from the obligations underlying such instrument and
the principal and interest payments with respect to such instrument provide a
yield to maturity greater than 120% of the yield to maturity at par of such
underlying obligations; and, provided further, that, Eligible Investments shall
include only such obligations or securities that mature on or before the
Business Day immediately preceding the next Distribution Date. In addition, no
Eligible Investment which incorporates a penalty for early withdrawal shall be
acquired unless the maturity of such Eligible Investment is on or before the
Business Day immediately preceding the next Distribution Date.
"Fiscal Year" means the calendar year or such portion thereof
as the Trust may be in existence.
"Funding Amount" means the aggregate Liquidity Capital
Contributions (to the extent not returned to such Funding Owner) and Mandatory
Capital Contributions as of the Closing Date which may be required to be made by
a Funding Owner as set forth on Schedule A attached hereto. For the purpose of
determining whether the aggregate Liquidity Capital Contributions (to the extent
not returned to such Funding Owner) and Mandatory Capital Contributions equal or
exceed the "Funding Amount," each Liquidity Capital Contribution and Mandatory
Capital Contribution shall be reduced by applying a discount rate of 7.24% per
annum for the period beginning on the Closing Date and ending on the date of
such Liquidity Capital Contribution or Mandatory Capital Contribution.
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"Funding Date" means the sixth Business Day prior to any
Payment Date for the Bonds which is also a Call Date.
"Funding Owner" means each of the Owners designated as Funding
Owners on Schedule A attached hereto.
"Indenture" means the trust indenture between the Trust and
the Indenture Trustee, dated as of November 1, 1997, pursuant to which the Bonds
are to be issued.
"Indenture Trustee" means the bank or trust company acting as
Indenture trustee under the Indenture.
"Liquidity Capital Contribution" means any Capital
Contribution from a Funding Owner required pursuant to Section 6.02(b).
"Mandatory Capital Contribution" means any Capital
Contribution from a Funding Owner required pursuant to Section 6.02(c).
"Master Securitization Agreement" means that certain Master
Purchase and Securitization Agreement between the Owner and The First National
Bank of Boston, as the Originator.
"Net Cash Flow" means with respect to any fiscal period of the
Trust, all revenues of the Trust decreased by (a) cash expenditures for
operating expenses (including interest on indebtedness of the Trust but not
including expense items which do not require current cash outlay), (b) capital
expenditures to the extent not made from reserves, (c) reserves for capital
expenditures, contingencies and working capital established in such amounts as
the Owner Trustee, with the consent of the Owners, may determine, (d) repayments
of principal on any Trust indebtedness and (e) taxes.
"Net Interest Income Attributable to Student Loans" means,
with respect to a Fiscal Year, the interest income from the Student Loans minus
any servicing fees and expenses, other operating expenses of the Trust and
interest expense of the Bonds.
"Net Interest Income Attributable to Student Loans as to Each
Owner" means Net Interest Income Attributable to Student Loans (i) multiplied by
the interest rate on such Owner's Related Owner's Notes divided by the weighted
average interest rate on the Notes and (ii) such product multiplied by such
Owner's Allocable Student Loans as at the end of such Fiscal Year divided by the
aggregate principal balance of the Student Loans as at the end of such Fiscal
Year.
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"Net Interest Income Attributable to Reserve Accounts" means,
with respect to a Fiscal Year, interest income from investments of all funds
held by the Indenture Trustee for the benefit of the holders of the Bonds and/or
the Trust and all funds, if any, held by the Owner Trustee or its agents for the
benefit of the Owners.
"Net Interest Income Attributable to Reserve Accounts as to
Each Owner" means Net Interest Income Attributable to Reserve Accounts
multiplied by such Owner's Allocable Bonds divided by the then outstanding
aggregate principal balance of the Bonds.
"Note Purchase Agreement" means that certain Note Purchase
Agreement between the Owner and Bank of America National Association as the
Originator.
"Notes" means the promissory notes to be sold to the Trust by
each Originator pursuant to the Master Securitization Agreement or the Note
Purchase Agreement, as the case may be.
"Originator" means either Bank of America National Association
or The First National Bank of Boston.
"Owner" means the Depositor and each of its successors in
interest as beneficiaries of the Trust pursuant to Article III hereof, including
any Funding Owner.
"Owner Trustee" means Delaware Trust Capital Management, Inc.,
a Delaware trust company, not in its individual capacity but solely as trustee.
"Payment Date" means any day specified as a payment date for
the Bonds pursuant to the Indenture.
"Percentage Interest" means the initial undivided beneficial
interest in the Trust Property of an Owner expressed as a percentage of the
total initial undivided beneficial interests in the Trust Property. References
to Percentage Interests herein shall be solely for the purpose of certificating
Owners' interests hereunder and for any other purpose specified in this
Agreement.
"Periodic Filings" means any filings or submissions that the
Trust is required to make with any state or Federal regulatory agency or under
the Code.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, trust (including any
beneficiary thereof), estate, custodian, nominee, unincorporated organization or
government or any agency or political subdivision thereof.
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"Rating Agency" means Moody's Investors Service, Inc. or Fitch
Ratings Services.
"Related Owner Notes" means, with respect to any Owner, all of
the Notes transferred to the Trust which represent Student Loans to students who
were attending or recently graduated from such Owner at the time such Student
Loans were originated.
"Secretary of State" means the office of the Secretary of
State of the State of Delaware.
"Servicer" means Pennsylvania Higher Education Assistance
Agency.
"Servicing Agreement" means the Servicing Agreement, dated
January 6, 1995, by and between the Owner and the Servicer.
"Sharing Ratio" means, with respect to any Owner and as of any
date, the ratio (expressed as a percentage) of (i) the sum of such Owner's
unreturned Capital Contribution and the aggregate unpaid principal balance of
such Owner's Related Owner Notes that are not in default to (ii) the sum of all
of the Owners' unreturned Capital Contributions and the aggregate unpaid
principal balance of the Notes that are not in default.
"Student Loan" means the education loans to students
originated under the GATESM (Guaranteed Access to Education) student loan
program.
"Super-majority Owners" shall have the meaning set forth in
Section 4.03.
"Transfer" means the sale, transfer or other assignment of all
of an Owner's right, title and interest in all or a portion of such Owner's
Beneficial Interest.
"Trust" means the trust established by this Agreement.
"Trust Certificate" means a certificate evidencing the
Beneficial Interest of an Owner in substantially the form attached hereto as
Exhibit 1.
"Trust Property" means all right, title and interest of the
Trust or the Owner Trustee on behalf of the Trust in and to any property
contributed to the Trust by the Owners or otherwise acquired by the Trust,
including without limitation all distributions, payments or proceeds thereon.
"Trust Related Agreements" means any instruments or agreements
signed by the Owner Trustee on behalf of the Trust, including the Administration
Agreement and the Assignment of Servicing Agreement.
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TAX TERMS:
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account the minimum gain
chargeback that such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Code" means the Internal Revenue Code of 1986, as amended.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Partners" means the Owners.
"Partnership" means the Trust.
"Partner Nonrecourse Debt" has the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
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"Partnership Minimum Gain" has the meaning set forth in
Section 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"Profit and Loss" means, for each Fiscal Year, an amount equal
to the Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profit or Loss pursuant to this definition shall be
added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profit or Loss pursuant to this definition, shall be
subtracted from such taxable income or loss;
(iii) Notwithstanding any other provisions of this
definition, any items which are specially allocated pursuant
to Section 7.03 or Section 7.04 shall not be taken into
account in computing Profit or Loss.
The amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Section 7.03
and 7.04 shall be determined by applying rules analogous to those set
forth in clauses (i) and (ii) above.
"Regulations" means the federal income tax regulations
promulgated by the United States Treasury Department under the Code as such
Regulations may be amended from time to time. All references herein to a
specific section of the Regulations shall be deemed also to refer
to any corresponding provision of succeeding Regulations.
ARTICLE II
ORGANIZATION
Section 2.01. NAME. The Trust created hereby shall be known as The
National Collegiate Trust 1997-S2, in which name the Owner Trustee may take any
action as provided herein.
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Section 2.02. OFFICE. The office of the Trust shall be in care of the
Owner Trustee, at the address set forth in Section 14.05. The Trust shall also
have an office at 237 Park Avenue, New York, New York 10017.
Section 2.03. PURPOSES AND POWERS. (a) The purpose of the Trust is to
engage in the following activities:
(i) to prepare and deliver a Prospectus, a Prospectus
Supplement and other offering materials in connection with public
issuance and sale of the Bonds;
(ii) to acquire a pool of Student Loans, to execute the
Indenture and to issue the Bonds;
(iii) to enter into the Administration Agreement and the
Servicing Agreement and to provide for the administration of the Trust
and the servicing of the Student Loans.
(iv) to engage in those activities and to enter into such
agreements that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(v) to engage in such other activities as may be required in
connection with conservation of the Trust Property and distributions to
Owners. Until the Indenture is discharged, the Trust shall not engage
in any business or activities other than in connection with, or
relating to, the foregoing and other than as required or authorized by
the terms of this Agreement and the Indenture, except as are incidental
to and necessary to accomplish such activities.
(b) Until the Indenture is discharged, the operations of the Trust
shall be conducted in accordance with the following standards:
(i) the Trust will act solely in its own name and the Owner
Trustee or other agents selected in accordance with this Agreement will
act on behalf of the Trust subject to direction by the Owners as
provided herein, but such action shall not be in violation of
the terms of this Agreement;
(ii) the Trust's funds and assets shall at all times be
maintained separately from those of the Owners and any of their
respective Affiliates;
(iii) The Trust shall maintain complete and correct books,
minutes of the meetings and proceedings of the Owners, and records of
accounts;
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(iv) the Trust shall conduct its business at the office of the
Owner Trustee and will use stationary and other business forms of the
Trust under its own name and not that of the Owners or any of their
respective Affiliates, and will avoid the appearance (x) of conducting
business on behalf of any Owner or any Affiliate of an Owner or (y)
that the assets of the Trust are available to pay the creditors of the
Owner Trustee or any Owner;
(v) the Trust's operating expenses shall be paid out of its
own funds; and
(vi) the Trust shall not hold itself out as being liable for
the debts of any Owner or any Affiliates of any Owner.
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute. The Owner Trustee acknowledges receipt in trust from the
Depositor as of the date hereof, of the sum of one hundred dollars ($100),
constituting the initial Trust Property.
Section 2.05. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Owner Trustee under the Trust Related Agreements. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute, and that this agreement constitute the governing
instrument of the Trust.
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST. The Owners shall be
jointly and severally liable for any and all liabilities and obligations of the
Trust; provided, however, that the Owners shall have rights of contribution in
proportion to their respective Percentage Interests; and provided further, that
an Owner shall be liable only for liabilities and obligations of the Trust
incurred from the date such Owner became duly registered as an Owner in
accordance with Sections 3.02 and 3.04 and such Owner shall continue to be
liable for such liabilities and obligations after such Owner transfers its
Beneficial Interest pursuant to Article III hereof or otherwise is no longer an
Owner for the purposes of this Agreement. Within ten Business Days of receipt or
a statement delivered by the Owner Trustee to the effect that amounts necessary
to pay expenses or to meet any obligation of the Trust are not available in the
Trust Property, and setting forth the basis for such expenses and such Owner's
allocable share of such expenses, each Owner shall deliver to the Owner Trustee
immediately available funds in the amount or such Owner's allocable share of
such expenses.
Section 2.07. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. The Trust shall not have any employees in
any state other than in the State of
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Delaware and payments will be received by the Trust only in the State of
Delaware and payments will be made by the Trust only from the State of Delaware.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST
Section 3.01. ISSUANCE OF TRUST CERTIFICATE.
(a) As of the date hereof, the Owner Trustee has issued and delivered
to the Depositor a Trust Certificate in the name of the Depositor evidencing
100% of the Beneficial Interest in the Trust.
(b) Each Trust Certificate shall be executed by manual signature on
behalf of the Owner Trustee by one of its Authorized Officers. Trust
Certificates bearing the manual signature of an individual who was, at the time
when such signature was affixed, authorized to sign on behalf of the Owner
Trustee shall bind the Trust, notwithstanding that such individual has ceased to
be so authorized prior to the delivery of such Trust Certificate or does not
hold such office at the date of such Trust Certificate. Each Trust Certificate
shall be dated the date of its issuance.
(c) On the Closing Date, the Owner Trustee is authorized to issue Trust
Certificates to each of the Persons set forth on Schedule A as Owners. Upon the
issuance of the first additional Trust Certificate, the Depositor shall be
deemed to have withdrawn as the initial Owner
and to have contributed its Trust Certificate to the Trust.
Section 3.02. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Owner Trustee shall maintain at its office referred to in
Section 2.02, or at the office of any agent appointed by it and approved in
writing by the Owners at the time of such appointment, a register for the
registration and Transfer of Trust Certificates. No Transfer of a Beneficial
Interest shall be made unless such Transfer is made pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), and state securities laws, or is exempt from the registration
requirements under the 1933 Act and state securities laws.
(b) The registered Owner of any Trust Certificate may Transfer all or
any portion of the Beneficial Interest evidenced by such Trust Certificate upon
surrender thereof to the Owner Trustee accompanied by the documents required by
Section 3.04. Such Transfer may be made by the registered Owner in person or by
its attorney duly authorized in writing upon surrender of the Trust Certificate
to the Owner Trustee accompanied by a written instrument of Transfer and with
such signature guarantees and evidence of authority of the Persons signing the
instrument of
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Transfer as the Owner Trustee may reasonably require. Promptly upon the receipt
of such documents and receipt by the Owner Trustee of the transferor's Trust
Certificate, the Owner Trustee shall record the name of such transferee as an
Owner and its Percentage Interest in the Trust Certificate register and issue,
execute and deliver to such Owner a Trust Certificate evidencing such Percentage
Interest. In the event a transferor Transfers only a portion of its Beneficial
Interest, the Owner Trustee shall register and issue to such transferor a new
Trust Certificate evidencing such transferor's new Percentage Interest.
Subsequent to a Transfer and upon the issuance of the new Trust Certificate or
Trust Certificates, the Owner Trustee shall cancel and destroy the Trust
Certificate surrendered to it in connection with such Transfer. The Owner
Trustee may treat the Person in whose name any Trust Certificate is registered
as the sole Owner of the Beneficial Interest in the Trust evidenced by such
Trust Certificate.
(c) As a condition precedent to any registration of Transfer, the Owner
Trustee may require the payment of a sum sufficient to cover the payment of any
tax or taxes or other governmental charges required to be paid in connection
with such Transfer and any other reasonable expenses connected therewith.
Section 3.03. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. If (i)
any mutilated Trust Certificate is surrendered to the Owner Trustee, or (ii) the
Owner Trustee receives evidence to its satisfaction that any Trust Certificate
has been destroyed, lost or stolen, and upon proof of ownership satisfactory to
the Owner Trustee together with such security or indemnity as may be requested
by the Owner Trustee to save it harmless, the Owner Trustee shall execute and
deliver a new Trust Certificate for the same Percentage Interest as the Trust
Certificate so mutilated, destroyed, lost or stolen, of like tenor and bearing a
different issue number, with such notations, if any, as the Owner Trustee shall
determine. In connection with the issuance of any new Trust Certificate under
this Section 3.03, the Owner Trustee may require the payment by the registered
Owner thereof of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Owner Trustee) connected therewith. Any
replacement Trust Certificate issued pursuant to this Section 3.03 shall
constitute complete and indefeasible evidence of ownership of a Beneficial
Interest, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
Section 3.04. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No Transfer of all or any part of a Beneficial Interest shall be
made to any Person unless (i) such Person delivers to the Owner Trustee an
accession agreement substantially in the form of Exhibit 2 hereof, and (ii)
except for the initial transfer of the Beneficial Interest of the Depositor, the
Owner Trustee shall have received a written opinion of counsel in form and
substance satisfactory to the Owner Trustee stating that such Transfer is exempt
from the 1933 Act and any applicable state securities law.
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(b) At any time that there is more than one Owner, no Transfer of a
Beneficial Interest shall be valid unless the Owner making such Transfer shall
have received the prior written consent to such Transfer of the Owners holding
at least 66 2/3% of both the Percentage Interests and the Sharing Ratios in the
Trust at such time, which consent may not be unreasonably withheld; PROVIDED,
HOWEVER, that in calculating the total Beneficial Interests in the Trust there
shall be excluded the Beneficial Interest owned by the transferor or (unless the
transferor and its Affiliates are the only Owners) any Affiliate thereof.
(c) Except for the initial issuance of the Trust Certificates to the
Depositor, no Transfer shall be valid if, as a result of such Transfer, (i) any
Person would have a Percentage Interest or a Sharing Ratio of 100%, considering
for such purpose all interests owned by any Affiliate of such Person as owned by
such Person, or (ii) such Transfer would result in a termination of the Trust
for Federal income tax purposes.
Section 3.05. ASSIGNMENT OF RIGHT TO DISTRIBUTIONS. An Owner may assign
all or any part of its right to receive distributions hereunder, but such
assignment (in the absence of a permitted Transfer) shall effect no change in
the ownership of the Trust.
ARTICLE IV
CONCERNING THE OWNERS
Section 4.01. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS.
(a) The Owner Trustee will take such action or refrain from taking such
action under this Agreement or any Trust Related Agreement as it shall be
directed pursuant to an express provision of this Agreement or such Trust
Related Agreement or, with respect to nonministerial matters, as it shall be
directed by all the Owners.
(b) Without limiting the generality of the foregoing, in connection
with the following nonministerial matters, the Owner Trustee will take no action
unless it receives written approval from all the Owners:
(i) the initiation of any claim or lawsuit by the Trust and
the compromise of any claim or lawsuit brought by or against the Trust;
(ii) the amendment, change or modification of this Agreement,
the Administration Agreement or any Trust Related Agreement;
(iii) the merger or consolidation of the Trust;
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(iv) the adoption of a plan of liquidation; and
(v) the filing of a voluntary petition in bankruptcy for the
Trust, which in no event shall the Owner Trustee be permitted to do or
be instructed to do until at least 366 days after the payment in full
of all Bonds issued by the Trust.
(c) No Owner shall take any action to cause the filing of an
involuntary petition in bankruptcy against the Trust.
Section 4.02. ACTION UPON INSTRUCTIONS.
(a) The Owner Trustee shall take such action or actions as may be
specified in this Agreement or in any instructions delivered in accordance with
this Article IV or Article VIII; provided, however, that the Owner Trustee shall
not be required to take any such action if it shall have reasonably determined,
or shall have been advised by counsel, that such action (i) is contrary to the
terms hereof or of any document contemplated hereby to which the Trust or the
Owner Trustee is a party or is otherwise contrary to law, (ii) is likely to
result in personal liability on the part of the Owner Trustee, unless the Owners
shall have provided to the Owner Trustee indemnification or security reasonably
satisfactory to the Owner Trustee against all costs, expenses and liabilities
arising from the Owner Trustee's taking such action, or (iii) would adversely
affect the status of the Trust as a partnership for Federal income tax purposes.
(b) No Owner shall direct the Owner Trustee to take or refrain from
taking any action contrary to this Agreement or any Trust Related Agreement, nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(c) Notwithstanding anything contained herein or in any Trust Related
Agreement to the contrary, the Owner Trustee shall not be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will (i) require the consent or approval or authorization or order
for the giving of notice to, or the registration with or taking of any action in
respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of any jurisdiction or any political
subdivision thereof in existence on the date hereof other than the State of
Delaware becoming payable by the Owner Trustee; or (iii) subject the Owner
Trustee to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by the Owner Trustee contemplated hereby.
(d) The Owner Trustee shall not have the power to remove the
Administrator under the Administration Agreement or appoint a successor
Administrator pursuant to the Administration Agreement without written
instruction by the Owners.
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Section 4.03. SUPER-MAJORITY CONTROL. Except as otherwise expressly
provided in this Agreement, any action which may be taken or consent or
instructions which may be given by the Owners under this Agreement may be taken
by the Owners holding in the aggregate at least 66 2/3% of both the Percentage
Interests and the Sharing Ratios in the Trust at the time of such action (the
"Super-majority Owners"). Any written notice of the Owners delivered pursuant to
this Agreement shall be effective if signed by the Super-majority Owners at the
time of the delivery of such notice.
Section 4.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee as follows:
(a) Upon the receipt of the Trust Property by the Owner Trustee under
this Agreement, the Owner Trustee on behalf of the Trust will have good title to
the Trust Property free and clear
of any lien.
(b) The Trust is not, and will not be upon conveyance of the Trust
Property to the Owner Trustee, an "Investment Company" or under the "control" of
an "Investment Company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(c) Except for the filing of the Certificate of Trust with the
Secretary of State, no consent, approval, authorization or order of, or filing
with, any court or regulatory, supervisory or governmental agency or body is
required under current law in connection with the execution, delivery or
performance by the Depositor of this Agreement or the consummation of the
transactions contemplated hereby; provided, however, that no representation or
warranty is made herein as to compliance with federal securities laws or the
securities or "blue sky" laws of any state.
(d) This Agreement has been duly and validly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the Depositor,
enforceable in accordance with its terms.
Section 4.05. POWER OF ATTORNEY. (a) GENERAL. Each Owner hereby
irrevocably constitutes and appoints the Administrator, with full power of
substitution, such Owner's true and lawful attorney-in-fact, in such Owner's
name, place and stead, with full power to act jointly and severally, to make,
execute, sign, acknowledge, swear to verify, deliver, file, record and publish
the following documents:
(i) Any certificate, instrument or document to be filed by the
Owners under the laws of any state, or by any governmental agency;
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(ii) Any certificate, instrument or document which may be
required to effect the continuation or the termination of the Trust,
including any amendments to the Agreement; provided such continuation
or termination is in accordance with the terms of this Agreement; and
(iii) Any written notice, instruction, instrument or document
under Article XII of this Agreement.
(b) DURATION OF POWER OF ATTORNEY. It is expressly intended by each of
the Owners that the Power of Attorney granted under this Section 4.05 is coupled
with an interest, and it is agreed that such Power of Attorney shall survive (i)
the dissolution, death or incompetency of the Owner and (ii) the assignment by
any Owner of the whole or any portion of such Owner's Beneficial Interest.
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
Section 5.01. INVESTMENT OF TRUST FUNDS. Unless otherwise directed in
writing by the Owners, income with respect to and proceeds of the Trust Property
which are received by the Owner Trustee more than one day prior to a
Distribution Date shall be invested and reinvested by the Owner Trustee in
Eligible Investments. Interest earned from such investment and reinvestment
shall be credited to the Trust Property.
Section 5.02. APPLICATION OF FUNDS.
Income with respect to and proceeds of Trust Property held by the Owner
Trustee on a Distribution Date shall be applied by the Owner Trustee on such
Distribution Date in the following order:
(i) FIRST, to pay any amounts due to the Owner Trustee under
this Agreement;
(i) SECOND, to pay any amounts due to the Administrator under
the Administration Agreement;
(iii) THIRD, to pay any amounts then due to any Person under
the Trust Related Agreements;
(iv) FOURTH, to pay any other expenses of the Trust; and
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(v) FIFTH, to the Owners in accordance with Section 7.06.
All payments to be made under this Agreement by the Owner Trustee shall be made
only from the income and proceeds of the Trust Property and only to the extent
that the Owner Trustee has received such income or proceeds.
Section 5.03. PAYMENTS TO INDENTURE TRUSTEE OF LIQUIDITY CAPITAL
CONTRIBUTIONS AND MANDATORY CAPITAL CONTRIBUTIONS. All payments made to the
Owner Trustee on behalf of the Trust of Mandatory Capital Contributions or
Liquidity Capital Contributions made by a Funding Owner on any Funding Date
pursuant to Section 6.02(b) or Section 6.02(c) shall be remitted to the
Indenture Trustee not later than one Business Day following receipt by the Owner
Trustee on behalf of the Trust together with a notice to the Indenture Trustee
and the Bond Insurer describing the payment made and whether any Funding Owner
has failed to make a required payment.
ARTICLE VI
CAPITAL
Section 6.01. TAX CHARACTERIZATION. It is intended that the Trust be
characterized and treated as a partnership for federal income tax purposes. All
references to a "Partner," the "Partners" and to the "Partnership" in this
Agreement and in the provisions of the Code and Regulations cited in this
Agreement shall be deemed to refer to an Owner, the Owners and the Trust,
respectively. The Tax Matters Partner of the Trust shall be as set forth in
Article XIII.
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS.
(a) The Depositor shall make a Capital Contribution in the amount of
one hundred dollars ($100) upon execution of this Agreement. Upon their
accession to the Trust Agreement as Owners and the issuance of Trust
Certificates to them in accordance with Section 3.01(c), the Owners will be
deemed to have made initial Capital Contributions in the amounts set forth on
Schedule A attached hereto.
(b) Up to but not exceeding its related Funding Amount (as decreased by
any Capital Contributions made by such Funding Owner pursuant to Section
6.02(c)), each Funding Owner shall make additional Capital Contributions in cash
(each, a "Liquidity Capital Contribution") on each Funding Date whenever there
is a shortfall of cash necessary to fund the Interest Reserve Amount (a "Reserve
Shortfall") in the Reserve Fund as required by Section 3.09(b) of the Indenture
following application of available funds by the Indenture Trustee on such
Funding Date. Each Funding Owner's Liquidity Capital Contribution for such
Funding Date shall be equal to the Reserve Shortfall multiplied by a fraction,
the numerator of which shall be the interest payments
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and related expenses on the Allocable Bonds of such Funding Owner minus actual
Collateral Proceeds received during the related Collection Period with respect
to the Allocable Student Loans of such Funding Owner, and the denominator of
which shall be the aggregate interest payments on the Allocable Bonds of all
Funding Owners and related expense payments made on such Funding Date minus the
actual Collateral Proceeds received during the related Collection Period with
respect to the Allocable Student Loans of all Funding Owners; provided that if
the amount of Liquidity Capital Contributions required from a Funding Owner
would be in excess of such Funding Owner's Funding Amount, each other Funding
Owner shall make an additional Liquidity Capital Contribution (but in no event
in excess of such Funding Owner's Funding Amount) in an amount equal to such
excess multiplied by a fraction, the numerator of which is the aggregate unpaid
principal balance of such Funding Owner's Allocable Student Loans and the
denominator of which is the aggregate unpaid principal balance of the Allocable
Student Loans of all Funding Owners required to make an additional Liquidity
Capital Contribution pursuant to this proviso. "Interest Reserve Amount,"
"Reserve Fund," "Collateral Proceeds" and "Collection Period" shall have the
meanings assigned to such terms in the Indenture.
(c) Up to but not exceeding its related Funding Amount (as decreased by
any Liquidity Capital Contributions by such Funding Owner made pursuant to
Section 6.02(b) that have not been returned to such Funding Owner in accordance
with the Indenture), each Funding Owner shall make additional Capital
Contributions in cash (each a "Mandatory Capital Contribution") on each Funding
Date whenever such Funding Owner's Capital Account is debited by the amount of
the Funding Owner's share of Loss allocated pursuant to Section 7.02(a).
(d) The Owner Trustee, or the Administrator on its behalf, shall make
the determination that any Liquidity Capital Contribution or Mandatory Capital
Contribution is payable not later than ten Business Days prior to each Funding
Date and shall promptly notify each Funding Owner of its obligations hereunder
and shall provide a copy of each such notice to the Indenture Trustee. Any such
notification shall be in writing and shall set forth such Funding Owner's
Default Losses, if any, attributable to such Funding Owner's Allocable Student
Loans, any related Reserve Shortfall, such Owner's Funding Amount, and the
amount of all Mandatory Capital Contributions and Liquidity Capital
Contributions (to the extent not returned).
(e) The Owner Trustee, or the Administrator on its behalf, may, with
the consent of the Bond Insurer so long as any Bonds are outstanding, and shall,
upon the direction of the Bond Insurer, institute proceedings for the collection
of all Mandatory Capital Contributions or Liquidity Capital Contributions
required to be made but not made hereunder, whether by declaration or otherwise,
and enforce any judgment obtained. The Owner Trustee shall not distribute any
Net Cash Flow to any Funding Owner that has not made all Capital Contributions
required to be made by it.
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Section 6.03. CAPITAL ACCOUNTS. A capital account shall be maintained
for each Owner throughout the term of the Trust in accordance with the rules of
Regulation ss.1.704-1(b)(2)(iv) as in effect from time to time, and, to the
extent not inconsistent therewith, to which the following provisions apply:
(a) To each Owner's Capital Account there shall be credited (i) the
amount of money contributed by such Owner to the Trust (including each Owner's
share of any liabilities of the Trust assumed by such Owner as provided in
Regulation Section 1.704-1(b)(2)(iv)(c)), including any Liquidity Capital
Contributions or Mandatory Capital Contributions by a Funding Owner, (ii) the
fair market value of any property contributed to the Trust by such Owner (net of
liabilities secured by such contributed property that the Trust is considered to
assume or take subject to under Code ss.752), and (iii) such Owner's share of
Profit and items of income and gain that are specially allocated pursuant to
Section 7.03 and 7.04. The initial Capital Contributions of each Owner are set
forth on Schedule A attached hereto.
(b) To each Owner's Capital Account there shall be debited (i) the
amount of money distributed to such Owner by the Trust (including any return to
a Funding Owner of a Liquidity Capital Contribution and any liabilities of such
Owner assumed by the Trust as provided in Regulation Section
1.704-1(b)(2)(iv)(c)) other than amounts that are in repayment of debt
obligations of the Trust to such Owner, (ii) the fair market value of property
distributed to such Owner (net of liabilities secured by such distributed
property that such Owner is considered to assume or take subject to), and (iii)
such Owner's share of Loss and items of loss or deduction that are specially
allocated pursuant to Sections 7.03 and 7.04.
(c) The Capital Account of a transferee Owner shall include the
appropriate portion of the Capital Account of the Owner from whom the transferee
Owner's interest was obtained.
(d) In determining the amount of any liability there shall be taken
into account Code Section 752(c) and any other applicable provisions of the Code
and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations.
Section 6.04. INTEREST. No Owner shall be entitled to interest on its
Capital Contribution or on any Profit retained by the Trust.
Section 6.05. OTHER ADDITIONAL CAPITAL CONTRIBUTIONS. Except for
Liquidity Capital Contributions and Mandatory Capital Contributions required
pursuant to Section 6.02, no Owner shall make an additional Capital Contribution
to the Trust, or receive a distribution from the Trust, of property unless this
Agreement shall have first been amended to the extent necessary to
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comply with the requirements of Sections 704(b) and (c) of the Code regarding
the distributive shares of, and the allocation of income, gain, loss, deduction
and credit among, partners of a partnership.
Section 6.06. INVESTMENT OF CAPITAL CONTRIBUTIONS. The cash Capital
Contributions of the Owners shall be invested by the Owner Trustee in accordance
with Section 5.01.
Section 6.07. REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS.
(a) The Owner Trustee shall have no personal liability for the
repayment of any Capital Contributions of the Owners.
(b) Following receipt by the Owner Trustee from the Indenture Trustee
of any returned Liquidity Capital Contributions on any Payment Date, such
Liquidity Capital Contributions shall be distributed to all Funding Owners who
previously made such contributions, pro rata in proportion to the unreturned
Liquidity Capital Contributions of each such Funding Owner.
(c) Following redemption or payment of the Bonds in full, principal
payments received by the Trust in a Fiscal Year on account of the Student Loans,
including prepayments of principal and amounts recovered in liquidation of a
Student Loan allocable to outstanding principal thereof, shall be distributed to
the Owners in proportion to the positive balances in their respective Capital
Accounts.
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS
Section 7.01. PROFIT. After giving effect to special allocations set
forth in Section 7.03, Profit for any Fiscal Year shall be allocated in the
following order and priority:
(a) OFFSET OF SECTION 7.02(C) ALLOCATION. Profit shall first be
allocated to the Owners in proportion to and to the extent of the excess, if
any, of (i) the cumulative Loss allocated to each Owner pursuant to Section
7.02(b) for all prior Fiscal Years, over (ii) the cumulative Profit allocated to
each Owner pursuant to this Section 7.01(a)(1) for all prior Fiscal Years;
(b) NET INTEREST INCOME ATTRIBUTABLE TO STUDENT LOANS AS TO EACH OWNER.
Net Interest Income Attributable to Student Loans as to Each Owner shall be
allocated as follows:
(i) First, to the extent that cumulative Loss
resulting from defaults on one or more Owner's Related Owner
Notes ("Default Losses") have been allocated to
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other Owners (the "Other Owners") pursuant to Section 7.02(a),
to the Other Owners to the extent of and in the same
proportions as such Default Losses were so allocated; and
(ii) Second, to such Owner.
(c) NET INTEREST INCOME ATTRIBUTABLE TO RESERVE ACCOUNTS AS TO EACH
OWNER. Net Interest Income Attributable to Reserve Accounts as to Each Owner
shall be allocated as follows:
(i) First, to the extent that the allocation under Section
7.01(b)(i) shall not have offset all allocations of Default
Losses to the Other Owners, to the Other Owners to the extent
of and in the same proportions as such Default Losses which
were not so offset were allocated; and
(ii) Second, to such Owner.
(d) OTHER PROFIT. All Profit for any Fiscal Year not allocated pursuant
to Section 7.01 (a), (b) and (c) shall be allocated as follows:
(i) First, to the extent that the allocation under Section
7.01 (b)(i) and (c)(i) shall not have offset all allocations
of Default Losses to the Other Owners, to the Other Owners to
the extent of and in the same proportion as such Default
Losses which were not so offset were allocated;
(ii) Second, all income resulting from recoveries on defaulted
Related Owner Notes shall be allocated to the related Owner of
such Notes to the extent the related Owner was previously
allocated Loss under Section 7.02(a) with respect to such
Related Owner Notes; and
(iii) Third, to the Owners in proportion to their Sharing
Ratios.
Section 7.02. LOSS. After giving effect to the special allocations set
forth in Section 7.03, Loss for any Fiscal Year shall be allocated as set forth
in Section 7.02(a) and (b), subject to the limitation in Section 7.02(c).
(a) LOSS ATTRIBUTABLE TO NOTE DEFAULTS. To the extent of any positive
balance in such Owner's Capital Account, and, with respect to a Funding Owner,
to the extent of the sum of any positive balance in such Owner's Capital Account
plus any uncontributed Funding Amount, each Owner shall be specially allocated
all Default Losses for such Fiscal Year resulting from defaults on such Owner's
Related Owner Notes transferred to the Trust. If the allocation of such Default
Losses would be in excess of the positive balance in such Owner's Capital
Account, or, in the case
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of a Funding Owner, the sum of the positive balance in such Owner's Capital
Account plus any uncontributed Funding Amount, such excess shall be allocated to
the Other Owners to the extent of the respective positive balance in each other
Owner's Capital Account and, with respect to a Funding Owner, to the extent of
the sum of any positive balance in such Owner's Capital Account plus any
uncontributed Funding Amount, and in proportion to each other Owner's initial
Capital Contributions and to a Funding Owner's aggregate Capital Contributions
plus any uncontributed Funding Amount.
(b) OTHER LOSS. All Loss not allocated pursuant to Section 7.02(a)
shall be allocated to the Owners in proportion to their Sharing Ratios.
(c) EFFECT OF ADJUSTED CAPITAL ACCOUNT DEFICIT. The Loss allocated
pursuant to Section 7.02(a) and (b) shall not exceed the maximum amount of Loss
that can be so allocated without causing any Owner to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. In the event some but not all of
the Owners would have Adjusted Capital Account Deficits as a consequence of an
allocation of Loss pursuant to Section 7.02(a) and (b), the limitation set forth
in this Section 7.02(c) shall be applied on a Owner by Owner basis so as to
allocate the maximum permissible Loss to the Owner under Section
1.704-1(b)(2)(ii)(d) of the Regulations.
Section 7.03. SPECIAL ALLOCATIONS.
(a) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Section 7.03, if there is a net decrease in Partnership Minimum Gain during any
Fiscal Year, each Owner shall be specially allocated items of Trust income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Owner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Owner pursuant thereto. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and
1.704-2(j)(2) of the Regulations. This Section 7.03(b) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(b) OWNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this Section 7.03, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year,
each Owner who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Partner's share of the net decrease in
Partner Nonrecourse Debt
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Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2)
of the Regulations. This Section 7.03(b) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and
shall be interpreted consistently therewith.
(c) QUALIFIED INCOME OFFSET. In the event any Owner unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Trust income and gain shall
be specially allocated to the Owner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of the Owner as quickly as possible, provided that an allocation
pursuant to this Section 7.03(c) shall be made only if and to the extent that
the Owner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article VII have been tentatively made as if
this Section 7.03(c) were not in this Agreement.
(d) GROSS INCOME ALLOCATION. In the event any Owner has a deficit
Capital Account at the end of any Fiscal Year which is in excess of the sum of
the amount such Owner is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations, each such Owner shall be specially allocated items of Trust income
and gain in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 7.03(d) shall be made only if and to the
extent that such Owner would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this Article VII have been made
as if Section 7.03(c) and this Section 7.03(d) were not in this Agreement.
(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year
shall be specially allocated among the Owners in proportion to their Sharing
Ratios.
(f) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Owner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse
Deductions are attributable in accordance with Regulations Section
1.704-2(i)(1).
(g) MANDATORY ALLOCATIONS UNDER CODE SECTION 704(C). Notwithstanding
the foregoing provisions of this Section 7.03, in the event Code Section 704(c)
or Code Section 704(c) principles applicable under Section 1.704-1(b)(2)(iv) of
the Regulations require allocations of Profit or Loss in a manner different than
that set forth above, the provisions of Code Section
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704(c) and the Regulations thereunder shall control such allocations. Any item
of Trust income, gain, loss and deduction with respect to any property (other
than cash) that has been contributed by a Partner to the capital of the Trust or
which has been revalued for Capital Account purposes pursuant to Section
1.744-1(b)(2)(iv) of the Regulations and which is required to be allocated to
such Partner for income tax purposes under Code Section 704(c) so as to take
into account the variation between the tax basis of such property and its fair
market value at the time of its contribution shall be allocated solely for
income tax purposes in the manner required or permitted under Code Section
704(c) using the "traditional method" described in Section 1.704-3(b) of the
Regulations, PROVIDED, HOWEVER, that curative allocations consisting of the
special allocation of gain or loss upon the sale or other disposition of the
contributed property shall be made in accordance with Section 1.704-3(c) of the
Regulations to the extent necessary to eliminate any disparity, to the extent
possible, between the Partners' book and tax Capital Accounts attributable to
such property; FURTHER PROVIDED, HOWEVER, that any other method allowable under
applicable Regulations may be used for any contribution of property as to which
there is agreement between the contributing Partner and the Administrator.
Section 7.04. CURATIVE ALLOCATIONS. The allocations set forth in
Sections 7.03(a) through (g) (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Owners that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Trust income, gain, loss, or deduction. Therefore, notwithstanding any
other provision of this Article VII (other than the Regulatory Allocations),
offsetting special allocations of Trust income, gain, loss, or deduction shall
be made so that, after such offsetting allocations are made, each Owner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Owner would have had if the Regulatory Allocations were not part of
the Agreement and all Trust items were allocated pursuant to Sections 7.01 and
7.02. In making such offsetting allocations, there shall be taken into account
future Regulatory Allocations under Sections 7.03(a) and (b) that, although not
yet made, are likely to offset other Regulatory Allocations previously made
under Sections 7.03(e) and (f).
Section 7.05. OTHER ALLOCATION RULES.
(a) For purposes of determining the Profit, Loss, or any other items
allocable to any period, Profit, Loss, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Owner
Trustee, under the direction of the Super-majority Owners, using any method
permissible under Code Section 706 and the Regulations thereunder.
(b) The Owners are aware of the income tax consequences of the
allocations made by this Article VII and hereby agree to be bound by the
provisions of this Article VII in reporting their shares of Trust income and
loss for income tax purposes.
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(c) Solely for purposes of determining a Owner's proportionate share of
the "excess nonrecourse liabilities" of the Trust within the meaning of Section
1.752-3(a)(3) of the Regulations, the Owner's interests in Trust profits are in
proportion to their Sharing Ratios.
(d) To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the Owner Trustee shall endeavor to treat distributions of Net Cash
Flow as having been made from the proceeds of a Nonrecourse Liability or a
Partner Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Limited Partner.
Section 7.06. DISTRIBUTION OF NET CASH FLOW. Except to the extent
prohibited by any other agreement to which the Trust is a party or is otherwise
bound and subject to Section 6.02 hereof, Net Cash Flow on each Distribution
Date shall be distributed on such Distribution Date to each Owner in an amount
equal to (i) the Profit allocated to such Owner under this Article VII and not
previously distributed to such Owner (ii) less the amount of Default Losses
allocated to such Owner to the extent such Default Losses were not applied in
reduction of the amount of any previous distribution of Net Cash Flow to such
Owner. All payments to be made under this Agreement by the Owner Trustee shall
be made only from the income and proceeds of the Trust Property and only to the
extent the Owner Trustee has received such income or proceeds.
Section 7.07. DISTRIBUTION STATEMENT. With each distribution to an
Owner pursuant to Section 7.06, the Owner Trustee shall deliver a Distribution
Date Statement setting forth, for the period since the preceding Distribution
Date:
(i) income and proceeds received by the Owner Trustee with
respect to the Trust Property;
(ii) amounts paid to the Owner Trustee;
(iii) amounts paid to any Person pursuant to a Trust Related
Agreement; and
(iv) amounts paid for other expenses of the Trust.
Section 7.08. ALLOCATION OF TAX LIABILITY. In the event that any tax is
imposed on the Trust, such tax shall be charged against amounts otherwise
distributable to the Owners in proportion to their respective Sharing Ratios.
The Owner Trustee is hereby authorized to retain from amounts otherwise
distributable to the Owners sufficient funds to pay or provide for the payment
of, and then actually pay, such tax as is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
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Section 7.09. METHOD OF PAYMENT. All amounts payable to an Owner
pursuant to this Agreement shall be paid by the Owner Trustee to such Owner or a
nominee therefor by check payable to such Owner, mailed first class to the
address of such Owner appearing on the register maintained pursuant to Section
3.02, or by crediting the amount to be distributed to such Owner to an account
maintained by such Owner with the Owner Trustee or by transferring such amount
by wire transfer in immediately available funds to a banking institution with
bank wire transfer facilities for the account of such Owner, as instructed in
writing from time to time by such Owner. The Owner Trustee may require an Owner
to pay any wire transfer fees incurred in connection with any wire transfer made
to such Owner.
Section 7.10. NO SEGREGATION OF FUNDS; NO INTEREST. Subject to Section
2.03(b)(ii) and Section 5.01, funds received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
Section 7.11. INTERPRETATION AND APPLICATION OF PROVISIONS BY THE
ADMINISTRATOR. The Owner Trustee shall appoint and authorize the Administrator
to interpret and apply the provisions set forth in this Article VII regarding
allocations of Profit and Loss and Distributions of Net Cash Flow, to resolve
any ambiguities that may result from such application and to provide the Owner
Trustee and the Owners with clarification of any provision as may be necessary
or appropriate. The determinations of the Administrator shall be binding upon
the Owners.
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
Section 8.01. GENERAL AUTHORITY. The Owner Trustee is authorized to
take all actions required or permitted to be taken by it pursuant to the terms
of this Agreement, the Trust Related Agreements and the Business Trust Statute.
The Owner Trustee is further authorized from time to time to take such action as
the Administrator directs with respect to the Trust Related Agreements.
Section 8.02. SPECIFIC AUTHORITY. The Owner Trustee is hereby
authorized and directed to take the following actions:
(a) execute the Certificate of Trust substantially in the form of
Exhibit 3 hereto; and
(b) execute and deliver on behalf of the Trust, the Trust Related
Agreements, including without limitation, the Trust Certificates and any other
document contemplated by the foregoing;
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in each case, in such form as the Administrator shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof.
Section 8.03. GENERAL DUTIES. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Owners. Notwithstanding the foregoing, the Owner Trustee shall have deemed to
have discharged its duties and responsibilities hereunder under the Trust
Related Agreements to the extent the Administrator has agreed in the
Administration Agreement to perform such acts or to discharge such duties of the
Owner Trustee hereunder or under any Trust Related Agreement, and the Owner
Trustee shall not be held liable for the default or failure of the Administrator
to carry out its obligations under the Administration Agreement.
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL
REVENUE SERVICE AND OTHERS. The Owner Trustee shall (i) maintain or cause to be
maintained the books of the Trust on a calendar year basis on the accrual method
of accounting, (ii) deliver to each Owner, within 60 days of the end of each
Fiscal Year, or more often, as may be required by the Code and the regulations
thereunder, a copy of the annual financial statement of the Trust for such
Fiscal Year and a statement in such form and containing such information as may
be required by such regulations, and as is necessary and appropriate to enable
each Owner to prepare its federal and state income tax returns, (iii) file such
tax returns relating to the Trust, and make such elections, including an
election for the first taxable year of the Trust, necessary for the Trust to
qualify as a partnership, or as may from time to time be required under any
applicable state or federal statute or rule or regulation thereunder, (iv) cause
such tax returns to be signed in the manner required by law, (v) collect or
cause to be collected any withholding tax required by the Code to be withheld by
the Owner Trustee with respect to distributions to Owners who are nonresident
aliens or foreign corporations, and (vi) cause to be mailed to each Owner copies
of all such reports and tax returns of the Trust.
Section 8.05. SIGNATURE OF RETURNS. The Owner Trustee shall sign on
behalf of the Trust the tax returns and other Periodic Filings of the Trust,
unless applicable law requires an Owner to sign such documents, in which case,
so long as the Depositor is an Owner and applicable law allows the Depositor to
sign any such document, the Depositor shall sign such document. At any time that
the Depositor is not an Owner, or is otherwise not allowed by law to sign any
such document, then the Owner required by law to sign such document shall sign.
Section 8.06. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS. In the event
that the Owner Trustee is unable to decide between alternative courses of
action, or is unsure as to the application of any provision of this Agreement or
any Trust Related Agreement, or such provision is ambiguous as to its
application, or is or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement or any Trust Related Agreement
permits any determination by the Owner Trustee or is silent or is incomplete as
to the course of action which
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the Owner Trustee is required to take with respect to a particular set of facts,
the Owner Trustee may give notice (in such form as shall be appropriate under
the circumstances) to the Owners requesting instructions and, to the extent that
the Owner Trustee shall have acted or refrained from acting in good faith in
accordance with any instructions received from the Owners, the Owner Trustee
shall not be liable on account of such action or inaction to any Person. If the
Owner Trustee shall not have received appropriate instructions within ten days
of such notice (or within such shorter period of time as may be specified in
such notice) the Owner Trustee may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent with this Agreement or the
Trust Related Agreements, as the Owner Trustee shall deem to be in the best
interests of the Owners, and the Owner Trustee shall have no liability to any
Person for such action or inaction.
Section 8.07. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment in respect of, register, record, sell, dispose of or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Owner Trustee or the Trust is a party, except as expressly provided by the
terms of this Agreement and no implied duties or obligations shall be read into
this Agreement against the Owner Trustee. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Trust Property which result
from claims against the Owner Trustee personally that are not related to the
ownership or the administration of the Trust Property or the transactions
contemplated by the Trust Related Agreements.
Section 8.08. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, and (ii) in accordance with instructions delivered
to the Owner Trustee pursuant to Section 8.06 and Article IV hereof.
Section 8.09. RESTRICTION. Notwithstanding anything herein to the
contrary, the Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust or (b) that would result in the Trust being
treated as an association taxable as a corporation for Federal income tax
purposes.
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ARTICLE IX
CONCERNING THE OWNER TRUSTEE
Section 9.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to the same but only upon the terms of this Agreement. The Owner
Trustee shall not be personally liable under any circumstances, except (i) for
its own willful misconduct or gross negligence, (ii) for liabilities arising
from the failure by the Owner Trustee to perform obligations expressly
undertaken by it in the last sentence of Section 8.07, or (iii) for taxes, fees
or other charges on, based on or measured by any fees, commissions or
compensation received by the Owner Trustee in connection with any of the
transactions contemplated by this Agreement or the Trust Related Agreements. In
particular, but not by way of limitation:
(a) The Owner Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer of the Owner Trustee;
(b) The Owner Trustee shall not be personally liable with respect to
any action taken or omitted to be taken by the Owner Trustee in good faith in
accordance with the instructions of the Administrator or the Owners;
(c) No provision of this Agreement shall require the Owner Trustee to
expend or risk its personal funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder, if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstance shall the Owner Trustee be personally liable
for any indebtedness of the Trust under any Trust Related Agreement;
(e) The Owner Trustee shall not be personally responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor, or for the form, character, genuineness,
sufficiency, value or validity of any Student Loan or Trust Certificate (other
than with respect to the due execution thereby by an Authorized Officer), or for
or in respect of the validity or sufficiency of the Administration Agreement or
the Trust Related Agreements; and
(f) The Owner Trustee shall not be liable for the default or misconduct
of the Administrator under any of the Trust Related Agreements or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Issuer hereunder or under any
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Trust Related Agreement that are required to be performed by the Administrator
under the Administration Agreement.
Section 9.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Owners, promptly upon receipt thereof, duplicates or copies of all
material reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee hereunder (other than
documents originated by or otherwise furnished to such Owners).
Section 9.03. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or any assistant treasurer or the secretary of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under any of the Trust Related
Agreements, the Owner Trustee (i) may act directly or, at the expense of the
Trust, through agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the default or misconduct
of such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care; and (ii) may, at the expense of the
Trust, consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it, and the Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.
Section 9.04. NOT ACTING IN INDIVIDUAL CAPACITY. Except as expressly
provided in this Article IX, in accepting the trusts hereby created the Owner
Trustee acts solely as trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or the Trust Related Agreements
shall look only to the Trust Property for payment or satisfaction thereof.
<PAGE>
-32-
ARTICLE X
COMPENSATION OF OWNER TRUSTEE
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive compensation from the Trust Property for its services hereunder as
set forth on the fee schedule attached hereto as Exhibit 4. The Owner Trustee
shall be entitled to be reimbursed for its reasonable expenses hereunder,
including, without limitation, the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and duties under this Agreement and the Trust Related Agreements.
Section 10.02. INDEMNIFICATION. The Owners shall be jointly and
severally liable for, and hereby agree to indemnify Delaware Trust Capital
Management, Inc., individually and as Owner Trustee and its successors, assigns,
agents and servants, from and against, any and all liabilities, obligations,
losses, damages, taxes (other than taxes incurred as the result of the payment
of fees and expenses pursuant to Section 10.01), claims, actions, suits, costs,
expenses and disbursements (including legal fees and expenses) of any kind and
nature whatsoever which may be imposed on, incurred by or asserted at any time
against the Owner Trustee (whether or not indemnified against by other parties)
in any way relating to or arising out of this Agreement, any Trust Related
Agreement, the administration of the Trust Property or the action or inaction of
the Owner Trustee hereunder, except only that the Owners shall not be required
to indemnify the Owner Trustee for expenses arising or resulting from any of the
matters described in the second sentence of Section 9.01. The indemnities
contained in this Section 10.02 shall survive the termination of this Agreement.
The obligations of the Owners pursuant to this Section 10.02 shall be borne in
proportion to their respective Percentage Interests. The indemnities contained
in this Section 10.02 extend only to the Owner Trustee in its individual
capacity.
Section 10.03. LIEN ON TRUST PROPERTY. The Owner Trustee shall have a
lien on the Trust Property for any compensation or expenses and indemnity due
hereunder which lien shall be prior to all other liens.
Section 10.04. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee from the Trust Property pursuant to this Article X shall be deemed
not to be part of the Trust Property immediately after such payment.
<PAGE>
-33-
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. TERMINATION OF TRUST.
(a) The trust created hereby shall terminate and, except as otherwise
provided in this Article XI, this Agreement shall be of no further force or
effect, upon the earlier of (i) if there are no Bonds outstanding, the unanimous
consent of the Owners, (ii) if there are no Bonds outstanding, the sale or other
final disposition by the Owner Trustee of the Trust Property and the final
distribution by the Owner Trustee of all funds or other property or proceeds of
the Trust Property in accordance with the terms of this Agreement and the Trust
Related Agreements, and (iii) 21 years less one day after the death of the
survivor of the descendants living on the date of this Agreement of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James.
(b) The bankruptcy, death, incapacity, dissolution or termination of
any Owner shall not operate to dissolve or terminate this Agreement, nor entitle
such Owner's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of the Trust
Property, nor otherwise affect the rights, obligations and liabilities of the
parties hereto.
(c) Upon the termination of the Trust pursuant to this Article XI, the
Owner Trustee shall cause a Certificate of Termination to be filed with the
Secretary of State.
Section 11.02. DISTRIBUTION OF ASSETS. Upon termination of the Trust,
the Owner Trustee shall take full account of the Trust assets and liabilities,
shall liquidate the assets as promptly as is consistent with obtaining the fair
value thereof, and shall apply and distribute the proceeds therefrom in the
following order:
(a) To the payment of the expenses of liquidation and the
debts and liabilities of the Trust;
(b) To the setting up of reserves which the Owner Trustee may
deem necessary or appropriate for anticipated obligations or
contingencies of the Trust arising out of or in connection with the
operation of the Trust. Such reserves may be paid over by the Owner
Trustee to an escrow agent or trustee selected by the Owner Trustee to
be disbursed by such escrow agent or trustee in payment of any of such
obligations or contingencies and, if any balance remains at the
expiration of such period as the Owner Trustee shall deem
<PAGE>
-34-
advisable, to be distributed by such escrow agent or trustee in the
manner hereinafter provided;
(c) To the Owners in accordance with the positive balances in
their respective Capital Accounts.
If at the time of liquidation the Owner Trustee shall determine that an
immediate sale of some or all of the Assets would cause undue loss to the
Owners, the Owner Trustee may, in order to avoid such loss and with the consent
of the Owners, defer liquidation.
Section 11.03. NO TERMINATION BY DEPOSITOR OR OWNERS. Except as
provided in Section 11.01, neither the Depositor nor the Owners shall be
entitled to terminate or revoke the Trust established hereunder.
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 12.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) The Owner Trustee may resign at any time without cause by
giving at least 60 days' prior written notice to the Administrator, the Owners
and the Bond Insurer, such resignation to be effective upon the acceptance of
appointment by a successor Owner Trustee under Section 12.01(b). In addition,
the Super-majority Owners may with the consent of the Bond Insurer at any time
remove the Owner Trustee without cause by an instrument in writing delivered to
the Owner Trustee and the Administrator, such removal to be effective upon the
acceptance of appointment by a successor Owner Trustee under Section 12.01(b).
In case of the resignation or removal of the Owner Trustee, the Owners may with
the consent of the Bond Insurer appoint a successor Owner Trustee by an
instrument signed by the Owners. If a successor Owner Trustee shall not have
been appointed within 30 days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Owner Trustee or the Owners may apply to any court of competent
jurisdiction to appoint a successor Owner Trustee to act until such time, if
any, as a successor Owner Trustee shall have been appointed as provided above.
Any successor Owner Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Owner Trustee appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further act
(except for the filing required under clause (e)
<PAGE>
-35-
below), shall become vested with all the estates, properties, rights, powers,
duties and trust of the predecessor Owner Trustee in the trusts hereunder with
like effect as if originally named the Owner Trustee herein; but nevertheless,
upon the written request of such successor Owner Trustee and the payment of all
fees and indemnities due the predecessor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to such successor
Owner Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers, duties and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to
such successor Owner Trustee all funds or other property then held or
subsequently received by such predecessor Owner Trustee upon the trusts herein
expressed.
(c) Any successor Owner Trustee, however appointed, shall be approved
by the Bond Insurer and shall be a bank or trust company (i) that meets the
requirements of (A) Section 3(a)(7) of the Investment Company Act of 1940, as
amended, and (B) Section 3807 of the Business Trust Statute and (ii) whose
parent entity has a combined capital and surplus of as least $50,000,000, if
there be such an institution willing, able and legally qualified to perform the
duties of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall, subject to the terms of
Section 12.01(c), be the Owner Trustee under this Agreement without further act.
(e) Any successor Owner Trustee appointed pursuant to this Article XII
shall file an amendment to the Certificate of Trust with the Secretary of State
reflecting the name and principal place of business of such successor Owner
Trustee.
Section 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES. At any time or
times for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Property may at the time be located, the Owner
Trustee and the Administrator, acting jointly, by an instrument in writing, may
appoint one or more individuals or corporations approved by the Administrator
and the Owner Trustee to act as separate trustee or separate trustees of all or
any part of the Trust Property to the full extent that local law makes it
necessary or appropriate for
<PAGE>
-36-
such separate trustee or separate trustees to act alone. If the Administrator
shall not have joined in such appointment within fifteen days after the receipt
of such request, the Owner Trustee, acting alone, shall have the power to make
such appointment.
ARTICLE XIII
TAX MATTERS PARTNER
Section 13.01. TAX MATTERS PARTNER. The tax matters partner (within the
meaning of section 6231(a)(7) of the Code and applicable Treasury Regulations)
of the Trust for all federal income tax purposes set forth in the Code shall be
the Owner that would be treated as the tax matters partner pursuant to section
6231(a)(7)(B) of the Code. Subject to Section 13.08, the tax matters partner
shall have the authority to represent the Trust and perform the duties imposed
on the tax matters partner under the Code, and as set forth in this Article
XIII.
Section 13.02. NOTICE OF TAX AUDIT. The tax matters partner shall give
prompt notice to the Owners upon receipt of advice that the Internal Revenue
Service intends to examine Trust income tax returns for any year.
Section 13.03. AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX. Subject to
Section 13.08, the tax matters partner shall have the authority to extend the
period for assessing any tax imposed on any Owner under the Code by any
agreement as provided for under Section 6229(b)(1)(B) of the Code.
Section 13.04. CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT.
Any petition for readjustment may, but is not required to, be filed by the tax
matters partner in accordance with Section 6226(a) of the Code in the United
States District Court for the district in which the Trust's principal place of
business is located, or the United States Claims Court.
Section 13.05. AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT.
Subject to Section 13.08, the tax matters partner shall enter into a settlement
agreement in accordance with Section 6224(c)(3) of the Code as directed by the
Owners.
Section 13.06. NOTICES SENT TO THE INTERNAL REVENUE SERVICE. The tax
matters partner shall use its best efforts to furnish to the Internal Revenue
Service the name, address, profits interest and taxpayer identification number
of each Owner and any additional information it receives from each Owner
regarding any change in that Owner's name, address, profits interest and
taxpayer identification number. In no event shall the tax matters partner be
liable, responsible or accountable in damages or otherwise to the Owner for any
loss in connection with furnishing such
<PAGE>
-37-
information to the Internal Revenue Service if the tax matters partner acts in
good faith and is not guilty of fraud or gross negligence.
Section 13.07. INDEMNIFICATION OF TAX MATTERS PARTNER. The Trust shall
indemnify and save harmless the tax matters partner against any loss, damage,
cost or expense (including attorneys' fees) incurred by it as a result of any
act performed or omitted on behalf of the Trust or any Owner or in furtherance
of the Trust's interests or the interests of the Owner, in its capacity as tax
matters partner, without, however, relieving the tax matters partner of
liability for bad faith, fraud or gross negligence.
Section 13.08. APPROVAL OF TAX MATTERS PARTNER'S DECISIONS. The tax
matters partner shall call a meeting of the Owners at any time in order to
discuss any decisions the tax matters partner may propose to make, notice of
which shall be included in the notice of such meeting. The tax matters partner
shall make no decision and take no action with respect to the determination,
assessment or collection of any tax imposed by the Code on the Owners unless and
until such decision has been approved by the Owners.
Section 13.09. PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE
ADMINISTRATIVE PROCEEDINGS. Nothing contained in this Article XIII shall be
construed to take away from any Owner any right granted to such person by the
Code to participate in any manner in administrative proceedings of the Internal
Revenue Service.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. SUPPLEMENTS AND AMENDMENTS. This Agreement may be
amended only by a written instrument signed by the Owner Trustee, the Bond
Insurer (for so long as there are Bonds outstanding or any amounts are owed to
the Bond Insurer), and all of the Owners at the time of such amendment;
provided, however, that if, in the opinion of the Owner Trustee, any instrument
required to be so executed adversely affects any right, duty or liability of, or
immunity or indemnity in favor of, the Owner Trustee under this Agreement or any
of the documents contemplated hereby to which the Owner Trustee or the Trust is
a party, or would cause or result in any conflict with or breach of any terms,
conditions or provisions of, or default under, the charter documents or by-laws
of the Owner Trustee or any document contemplated hereby to which the Owner
Trustee is a party, the Owner Trustee may in its sole discretion decline to
execute such instrument.
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER. Legal title
to all Trust Property shall be vested at all times in the Trust as a separate
legal entity, except where the laws
<PAGE>
-38-
of any jurisdiction require title to be vested in a trustee in which case legal
title shall be vested in the Owner Trustee on behalf of the Trust. The Owners
shall not have legal title to any part of the Trust Property and shall only have
an undivided beneficial interest therein. No transfer, by operation of law or
otherwise, of any right, title and interest of the Owners in and to their
undivided Beneficial Interests in the Trust Property hereunder shall operate to
terminate this Agreement or the trusts hereunder or entitle any successor
transferee to an accounting or to the transfer to it of legal title to any part
of the Trust Property.
Section 14.03. PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING. The
pledge of any Trust Property to any Person by the Owner Trustee made under any
Trust Related Agreement and pursuant to the terms of this Agreement shall bind
the Owners and shall be effective to transfer or convey the rights of the Owner
Trustee and the Owners in and to such Trust Property to the extent set forth in
such Trust Related Agreement. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
pledge or as to the application of any proceeds with respect thereto by the
Owner Trustee.
Section 14.04. LIMITATIONS ON RIGHTS OF OTHERS. Nothing in this
Agreement, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Administrator and the Owners any legal or
equitable right, remedy or claim in the Trust Property or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein
provided, however, that for so long as there are Bonds outstanding or any
amounts are owed to the Bond Insurer, the Indenture Trustee, the holders of the
Bonds, and the Bond Insurer are third party beneficiaries hereof.
Section 14.05. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and delivered by
hand or mailed by certified mail, postage prepaid, if to the Owner Trustee,
addressed to: Delaware Trust Capital Management, Inc., 900 Market Street,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration, or to
such other address as the Owner Trustee may have set forth in a written notice
to the Owners; and if to an Owner, addressed to it at the address set forth for
such Owner in the register maintained by the Owner Trustee. Whenever any notice
in writing is required to be given by the Owner Trustee hereunder, such notice
shall be deemed given and such requirement satisfied 72 hours after such notice
is mailed by certified mail, postage prepaid, addressed as provided above; any
notice given by an Owner to the Owner Trustee shall be effective upon receipt by
an Authorized Officer of the Owner Trustee. A copy of any notice delivered to
the Owner Trustee shall also be delivered to the Administrator, addressed to:
First Marblehead Data Services Inc., 277 Park Avenue, New York, New York 10017.
Section 14.06. SEVERABILITY. Any provision of this Agreement which 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
<PAGE>
-39-
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 14.07. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 14.08. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns and each Owner and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by an Owner shall bind the
successors and assigns of such Owner.
Section 14.09. 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 14.10. GOVERNING LAW. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance.
Section 14.11. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement except as otherwise expressly provided or unless the context otherwise
requires:
(a) the defined terms in this Agreement include the plural as well as
the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "paragraphs", and
other subdivisions without reference to a document are to designated Articles,
Sections, paragraphs and other subdivisions of this Agreement;
(d) a reference to a paragraph without further reference to a Section
is a reference to such paragraph as contained in the same Section in which the
reference appears, and this rule shall also apply to subparagraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
<PAGE>
-40-
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
<PAGE>
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above
written.
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity except as
expressly provided herein, but solely as
Owner Trustee
By:______________________________________
Name: Richard N. Smith
Title: Vice President
THE NATIONAL COLLEGIATE TRUST,
as Depositor and Owner
By: Delaware Trust Capital
Management, Inc., not in its
individual capacity but solely
as Owner Trustee
By:______________________________________
Name: Richard N. Smith
Title: Vice President
ACKNOWLEDGED WITH RESPECT
TO THE POWER OF ATTORNEY
GRANTED IN SECTION 4.05
FIRST MARBLEHEAD DATA SERVICES INC.
By:______________________________________
Name:
Title:
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Owners Initial Capital Initial
(excluding Allocable Initial Allocable Contribution Sharing Ratio Percentage
Funding Owners) Bonds ($) Student Loans ($) ($) (%) Interest ($)
- --------------- --------- ----------------- --- --- ------------
<S> <C> <C> <C> <C> <C>
Albright College 118,880 110,030 24,561 1.66 1.41
Allegheny College 87,428 80,920 14,946 1.18 1.00
Babson College 2,772 2,566 436 .04 .03
Daniel Webster 183,563 169,898 36,792 2.55 2.16
College
Embry-Riddle 168,977 156,398 43,328 2.47 2.09
Aeronaut
University
Franciscan 144,094 133,367 30,143 2.02 1.71
University of
Steubenville
Franklin Pierce 305,002 282,297 81,869 4.49 3.81
College
Geneva College 7,454 6,899 1,393 0.10 0.09
Illinois Institute of 39,243 36,322 7,185 0.54 0.46
Technology
Kings College 4,586 4,245 749 0.06 0.05
Linfield College 25,591 23,686 4,777 0.35 0.30
Lycoming College 129,390 119,758 22,404 1.75 1.49
Mount Ida College 27,087 25,071 12,260 0.46 0.39
Oglethorpe College 13,164 12,184 3,695 0.20 0.17
Pt. Loma Nazarene 631,499 584,489 222,387 9.96 8.44
College
Tulane University 40,328 37,326 12,445 0.61 0.52
Utica College 177,545 164,328 39,389 2.51 2.13
Wesleyan College 149,326 138,210 56,133 2.40 2.03
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Initial Initial
Initial Allocable Capital Funding Sharing
Funding Allocable Student Loans Contributio Amount Ratio Percentage
Owners Bonds ($) ($) n ($) ($) (%) Interest
------ --------- --- ----- --- --- --------
<S> <C> <C> <C> <C> <C> <C>
Beaver College 114,137 105,640 4,715 22,885 1.36 1.39
Bryant College 95,206 88,119 (4,724) 20,664 1.03 1.09
Clarkson 1,811,660 1,676,796 (60,904) 408,945 19.95 21.19
University
Elmira College 237,767 220,067 (2,555) 64,500 2.68 2.95
Hartwick 1,602,507 1,483,213 (17,580) 405,934 18.09 19.58
College
Pepperdine 934,836 865,245 (43,924) 232,566 10.14 11.03
University
Presbyterian 123,157 113,989 (2,673) 26,752 1.37 1.44
College
Roger Williams 265,583 245,812 (13,466) 71,164 2.87 3.18
University
Santa Clara 275,102 254,623 (2,318) 61,428 3.11 3.28
University
St. Anselm 534,115 494,354 (5,611) 139,886 6.03 6.58
College
</TABLE>
<PAGE>
EXHIBIT 1
FORM OF TRUST CERTIFICATE
THE NATIONAL COLLEGIATE TRUST 1997-S2
TRUST CERTIFICATE
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS TRUST
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF UNLESS IN THE OPINION OF
COUNSEL SATISFACTORY TO THE OWNER TRUSTEE, SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND STATE SECURITIES LAWS. THE TRANSFER
OF THIS TRUST CERTIFICATE WILL NOT BE EFFECTIVE UNLESS THE TRANSFEREE
HAS DELIVERED TO THE OWNER TRUSTEE A LETTER IN THE FORM REQUIRED BY
SECTION 3.04(A) OF THE TRUST AGREEMENT AND THE TRANSFEREE PROVIDES THE
OWNER TRUSTEE WITH EVIDENCE SATISFACTORY TO THE OWNER TRUSTEE
DEMONSTRATING THE TRANSFEROR'S COMPLIANCE WITH SECTION 3.04(B) OF THE
TRUST AGREEMENT.
TRUST CERTIFICATE
UNDER TRUST AGREEMENT, DATED
AS OF ____________, 1997
Certificate No. 1
Delaware Trust Capital Management, Inc., not in its individual
capacity, but solely as owner trustee (the "Owner Trustee") under a Trust
Agreement, dated as of ____________, 1997, with The National Collegiate Trust
(the "Depositor"), on behalf of the holders from time to time (each an "Owner")
of beneficial interests in the trust created thereby (the "Trust Agreement"),
hereby certifies that _________________ is the owner of a ___% undivided
beneficial interest in the Trust Property provided for and created by the Trust
Agreement. This Trust Certificate is issued pursuant to and is entitled to the
benefits of the Trust Agreement, and each Owner by acceptance hereof shall be
bound by the terms of the Trust Agreement. Reference is hereby made to the Trust
Agreement for a statement of the rights and obligations of the Owner hereof. The
<PAGE>
2
Owner Trustee may treat the person shown on the register maintained by the Owner
Trustee pursuant to Section 3.02 of the Trust Agreement as the absolute Owner
hereof for all purposes.
Capitalized terms used herein without definition have the meanings
ascribed to them in or by reference in the Trust Agreement.
Transfer of this Trust Certificate is subject to certain restrictions
and limitations set forth in the Trust Agreement, including the requirement that
any transfer requires the prior consent of owners of at least 66 2/3% of the
Percentage Interests in the Trust. In the manner more fully set forth in, and as
limited by, the Trust Agreement, this Trust Certificate may be transferred upon
the books of the Owner Trustee by the registered Owner in person or by his
attorney duly authorized in writing upon surrender of this Trust Certificate to
the Owner Trustee accompanied by a written instrument of transfer and with such
signature guarantees and evidence of authority of the Persons signing the
instrument of transfer as the Owner Trustee may reasonably require, whereupon
the Owner Trustee shall issue in the name of the transferee a Trust Certificate
or Trust Certificates evidencing the amount and extent of interest of the
transferee.
The Owner hereof, by its acceptance of this Trust Certificate, warrants
and represents to the Owner Trustee and to the Owners of the other Trust
Certificates issued under the Trust Agreement and agrees (a) that it is jointly
and severally liable for all fees, expenses, taxes, indemnity payments and other
charges of the Trust pursuant to the Trust Agreement, (b) not to transfer this
Trust Certificate except in accordance with the Trust Agreement.
This Trust Certificate and the Trust Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules).
<PAGE>
3
IN WITNESS WHEREOF, the Owner Trustee, pursuant to the Trust Agreement,
has caused this Trust Certificate to be issued as of the date hereof.
DELAWARE TRUST CAPITAL MANAGEMENT, INC., not
in its individual capacity, but solely as
Owner Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Dated: , 1997
<PAGE>
EXHIBIT 2
FORM OF ACCESSION AGREEMENT
__________________, 1997
Delaware Trust Capital Management, Inc.
900 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
Dear Sirs:
We refer to the Trust Agreement, dated as of ____________ 7, 1997 (the
"Trust Agreement"), between The National Collegiate Trust (the "Company"), and
Delaware Trust Capital Management, Inc., a Delaware business trust company (in
its capacity as trustee thereunder, the "Owner Trustee"). We propose to purchase
a beneficial interest in The National Collegiate Trust 1997-S2, a Delaware trust
(the "Trust") formed pursuant to the Trust Agreement. Capitalized terms used
herein without definition have the meanings given them in the Trust Agreement.
1. We hereby agree, as provided and to the extent specified in Section
2.06 of the Trust Agreement, to be jointly and severally liable with any other
holders of Trust Certificates with respect to the Trust for all fees, expenses,
taxes, indemnity payments and other liabilities of the Trust in accordance with
the terms of the Trust Agreement, including (except as otherwise provided in the
Trust Agreement) those incurred by Delaware Trust Capital Management, Inc. in
its capacity as Owner Trustee in the administration of the Trust thereunder, to
the extent such fees, expenses, taxes, indemnity payments and other liabilities
of the Trust or the Owner Trustee, as the case may be, with respect to the
Trust, are not paid out of the Trust Property; provided, however, that we will
be liable only for obligations of the Trust arising on and after the date
hereof.
2. We understand that our Trust Certificate is not being registered
under the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities or "Blue Sky" law and is being sold to us in a transaction that is
exempt from the registration requirements of the 1933 Act and any applicable
state laws.
3. We have knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Trust, we are able to bear the economic risk of investment in the Trust and we
are an "accredited investor" as defined in Regulation D under the 1933 Act.
<PAGE>
2
4. We acknowledge that none of the Trust, the Company or the Owner
Trustee has advised us concerning the federal or state income tax consequences
of owning beneficial interest in the Trust, including the tax status of the
Trust or the likelihood that distributions from the Trust would be characterized
as "unrelated business income" for federal tax purposes, and we have consulted
with our own tax advisor with respect to such matters.
5. We are acquiring our Trust Certificate for our own account and not
for the benefit of any other person and not with a view to any distribution of
our beneficial interest in the Trust subject, nevertheless, to the understanding
that disposition of our property shall at all times be and remain within our
control.
6. We agree that our beneficial interest in the Trust must be held
indefinitely by us unless subsequently registered under the 1933 Act and any
applicable state securities or "Blue Sky" law or unless exemptions from the
registration requirements of the 1933 Act and applicable
state laws are available.
7. We agree that in the event that at some future time we wish to
dispose of or exchange any of our beneficial interest in the Trust, we will not
transfer or exchange any of our beneficial interest in the Trust unless we have
obtained the prior written consent to such transfer or exchange pursuant to
Section 3.04 of the Trust Agreement, and either:
(A)(1) the transfer or exchange is made to an Eligible
Purchaser (as defined below), (2) a letter to substantially the same
effect as this letter is executed promptly by such Eligible Purchaser
and (3) all offers or solicitations in connection with the sale (if a
sale), whether made directly or through any agent acting on our behalf,
are limited only to Eligible Purchasers and are not made by means of
any form of general solicitation or general advertising whatsoever; or
(B) our beneficial interest in the Trust is sold in a
transaction that does not require registration under the 1933 Act and
any applicable State "Blue Sky" law.
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe can make
representations with respect to itself to substantially the same effect as the
representations set forth herein.
8. We understand that our Trust Certificate bears a legend to
substantially the following effect:
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS
TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
<PAGE>
3
SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD
OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF
UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT AND STATE
SECURITIES LAWS. THE TRANSFER OF THIS TRUST CERTIFICATE WILL NOT BE
EFFECTIVE UNLESS THE TRANSFEREE HAS DELIVERED TO THE OWNER TRUSTEE A
LETTER IN THE FORM REQUIRED BY SECTION 3.04(A) OF THE TRUST AGREEMENT
AND THE TRANSFEREE PROVIDES THE OWNER TRUSTEE WITH EVIDENCE
SATISFACTORY TO THE OWNER TRUSTEE DEMONSTRATING THE TRANSFEROR'S
COMPLIANCE WITH SECTION 3.04(B) OF THE TRUST AGREEMENT.
9. We agree to be bound by all the terms and conditions of our Trust
Certificate and the Trust Agreement.
Very truly yours,
[Name of Purchaser]
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Accepted and Acknowledged this
____ day of ____________, 1997.
DELAWARE TRUST CAPITAL MANAGEMENT, INC., not in its
individual capacity, but solely as Owner Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
<PAGE>
EXHIBIT 3
CERTIFICATE OF TRUST
OF
THE NATIONAL COLLEGIATE TRUST 1997-S2
THE UNDERSIGNED, Delaware Trust Capital Management, Inc., as trustee,
for the purpose of forming a business trust does hereby certify as follows:
1. The name of the business trust is:
THE NATIONAL COLLEGIATE TRUST 1997-S2
2. The name and business address of the trustee of the business trust
in the State of Delaware is Delaware Trust Capital Management, Inc., 900 Market
Street, Wilmington, Delaware 19801.
3. The business trust reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Trust in the manner now or
hereafter prescribed by law.
4. This Certificate of Trust shall be effective upon filing.
THE UNDERSIGNED, being the trustee hereinbefore named, for the purpose
of forming a business trust pursuant to the provisions of the Delaware Business
Trust Act, does make this certificate of trust, hereby declaring and further
certifying that this is its act and deed and that to the best of the
undersigned's knowledge and belief the facts herein stated are true.
DELAWARE TRUST CAPITAL
MANAGEMENT, INC.,
as trustee
By:_______________________________
Name: Richard N. Smith
Title: Vice President
<PAGE>
EXHIBIT 4
FEE SCHEDULE
EXHIBIT 4.1
<PAGE>
=============================================================================
THE NATIONAL COLLEGIATE TRUST 1997-S2
a trust acting through Delaware Trust Capital Management, Inc.,
not in its individual capacity but solely
as Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Trustee
---------------------------------------
INDENTURE
Dated as of November 1, 1997
---------------------------------------
GATESM RECEIVABLE ASSET-BACKED DEBT SECURITIES (GRADSSM)
7.24% COLLATERALIZED STUDENT LOAN BONDS
Series 1997-S2
==============================================================================
<PAGE>
INDENTURE DATED AS OF NOVEMBER 1, 1997
BETWEEN THE NATIONAL COLLEGIATE TRUST 1997-S2
AS ISSUER AND STATE STREET BANK AND TRUST COMPANY AS TRUSTEE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.
TIA INDENTURE SECTION
Section 310 (a)(1)..................................................7.08
(a)(2)..................................................7.09
(a)(3)..................................................7.14
(a)(4)........................................Not Applicable
(a)(5)..................................................7.08
(b).....................................................7.08
........................................................7.10
(c)...........................................Not Applicable
Section 311 (a).....................................................7.13
(b).....................................................7.13
(c)...........................................Not Applicable
Section 312 (a).....................................................8.01
.....................................................8.02(a)
(b)..................................................8.02(b)
(c)..................................................8.02(c)
Section 313 (a)..................................................8.03(a)
(b)..................................................8.03(a)
(c).....................................................8.03
(d)..................................................8.03(b)
Section 314 (a).....................................................8.04
(b)(1).........................................2.04(c)(viii)
.....................................................9.05(a)
(b)(2)...............................................9.05(b)
(c)(1)...............................................2.04(e)
........................................................5.01
(c)(2)......................................................
........................................................2.04
........................................................5.01
(c)(3)........................................Not Applicable
(d)(1)...............................................8.03(a)
.....................................................4.04(b)
(d)(2)...............................................2.04(f)
(d)(3)...............................................2.04(f)
(e)....................................................13.01
(f)...........................................Not Applicable
Section 315 (a)..................................................7.01(a)
(b).....................................................7.02
<PAGE>
.......................................................14.05
(c)..................................................7.01(b)
(d)..................................................7.01(c)
(e).....................................................6.14
Section 316 (a)(1)(a)...............................................6.12
........................................................3.01
(a)(1)(B)...............................................6.02
........................................................6.13
(a)(2)........................................Not Applicable
(b).....................................................6.19
(c).....................................................1.01
.......................................................12.02
Section 317(a)(1).........................................................6.03
........................................................6.06
(a)(2)..................................................6.05
(b).....................................................7.06
Section 318 (a)....................................................13.06
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS..................................................-2-
SECTION 1.01 GENERAL DEFINITIONS.................................-2-
-------------------
Accountants...........................................................-2-
"Act" and "Act of Bondholders"........................................-2-
Administrator.........................................................-2-
Administration Agreement..............................................-2-
Affiliate.............................................................-2-
Agent .............................................................-2-
Aggregate Current Principal Amount....................................-2-
Authorized Officer....................................................-2-
Available Payment Amount..............................................-3-
BANA .............................................................-3-
"Bondholder" or "Holder"..............................................-3-
Bond Insurance Policy.................................................-3-
Bond Insurer..........................................................-3-
Bond Insurer Default..................................................-3-
Bond Insurer's Fiscal Agent...........................................-3-
Bond Interest Rate....................................................-4-
Bond Owner............................................................-4-
-i-
<PAGE>
"Bond Register" and "Bond Registrar"..................................-4-
Bonds .............................................................-4-
Book-Entry Bonds......................................................-4-
Business Day..........................................................-4-
Closing Date..........................................................-4-
Code .............................................................-4-
Collateral............................................................-4-
Collateral Proceeds...................................................-4-
Collateral Proceeds Account...........................................-4-
Collection Period.....................................................-4-
Commission............................................................-5-
Commitment Letter.....................................................-5-
Control Party.........................................................-5-
Corporate Trust Office................................................-5-
Costs of Issuance.....................................................-5-
Cost of Issuance Account..............................................-5-
Cost of Issuance Amount................................................-5-
Current Principal Amount...............................................-5-
Custodial Agreement....................................................-5-
Default ..............................................................-6-
Defaulted Student Loan.................................................-6-
Deficiency Amount......................................................-6-
Definitive Bonds.......................................................-6-
-ii-
<PAGE>
Demand for Payment.....................................................-6-
Depository.............................................................-6-
Depository Notice Date.................................................-6-
Depository Participants................................................-6-
DTC Letter Agreement...................................................-6-
Due Date ..............................................................-6-
Eligible Investments...................................................-6-
Event of Default.......................................................-7-
FNBB ..............................................................-8-
Full Prepayment........................................................-8-
Funding Owner..........................................................-8-
Funding Owner Payments.................................................-8-
Grant ..............................................................-8-
Guaranty Fee...........................................................-8-
Guaranty Fee Arrearage.................................................-8-
Guaranty Fee Percentage................................................-8-
Indenture..............................................................-8-
Independent............................................................-9-
Individual Bond........................................................-9-
Insured Payments.......................................................-9-
Interest Accrual Period................................................-9-
Interest Payment Date..................................................-9-
-iii-
<PAGE>
Interest Reserve Amount.................................................-9-
Issuer ...............................................................-9-
Issuer Order" or "Issuer Request.......................................-10-
Issuer Redemption......................................................-10-
Liquidation Proceeds...................................................-10-
Loan Documents.........................................................-10-
MBIA ..............................................................-10-
MBIA Documents.........................................................-10-
Net Loans Withdrawn....................................................-10-
Notice of Non-Payment..................................................-10-
Note Rate..............................................................-10-
Officers' Certificate..................................................-10-
Opinion of Counsel.....................................................-10-
Origination Agreement..................................................-10-
Outstanding............................................................-11-
Outstanding Obligations................................................-11-
Owner Participant......................................................-11-
Owner Trustee..........................................................-12-
Partial Prepayment.....................................................-12-
Paying Agent...........................................................-12-
Payment Date...........................................................-12-
Payment Date Statement.................................................-12-
Person ..............................................................-12-
-iv-
<PAGE>
Pledged Account or Fund................................................-12-
Predecessor Bonds......................................................-12-
Preference Amount......................................................-12-
Prepayment.............................................................-12-
Principal Payment Date.................................................-12-
Proceeding.............................................................-13-
Promisor ..............................................................-13-
"Rating Agency or "Rating Agencies"....................................-13-
Record Date............................................................-13-
Redemption Date........................................................-13-
Redemption Price.......................................................-13-
Reimbursement Agreement................................................-13-
Reimbursement Amounts..................................................-13-
Reserve Fund...........................................................-13-
Responsible Officer....................................................-13-
Sale ..............................................................-13-
Schedule of Student Loans..............................................-13-
Servicer ..............................................................-14-
Servicer Determination Date............................................-14-
Servicer Remittance....................................................-14-
Servicer Remittance Report.............................................-14-
Servicing Agreement....................................................-14-
-v-
<PAGE>
Servicing Fee..........................................................-14-
Stated Maturity........................................................-14-
Stated Principal Balance...............................................-14-
Student Loan...........................................................-14-
Student Loan Collateral................................................-14-
Student Loan Note......................................................-15-
Surety Fee.............................................................-15-
Surety Fee Arrearage...................................................-15-
Transaction Documents..................................................-15-
Trust Agreement........................................................-15-
Trust Company..........................................................-15-
Trust Estate...........................................................-15-
Trust Indenture Act" or "TIA...........................................-15-
Trustee ..............................................................-15-
ARTICLE II
THE BONDS.....................................................-16-
SECTION 2.01 FORMS GENERALLY......................................-16-
SECTION 2.02 FORMS OF BONDS.......................................-16-
SECTION 2.03 GENERAL PROVISIONS WITH RESPECT TO PRINCIPAL
AND INTEREST PAYMENTS;
DENOMINATIONS.......................................-16-
SECTION 2.04 EXECUTION, AUTHENTICATION, DELIVERY AND DATING........-18-
SECTION 2.05 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE...-20-
SECTION 2.06 MUTILATED, DESTROYED, LOST OR STOLEN BONDS............-22-
-vi-
<PAGE>
SECTION 2.07 PERSONS DEEMED OWNERS.................................-22-
SECTION 2.08 CANCELLATION..........................................-23-
ARTICLE III
PAYMENTS ON THE BONDS.................................-26-
SECTION 3.01 COLLECTION OF MONEY...................................-26-
SECTION 3.02 PAYMENTS OF PRINCIPAL AND INTEREST....................-26-
SECTION 3.03 COLLATERAL PROCEEDS ACCOUNT; APPLICATION OF FUNDS.....-28-
SECTION 3.04 GENERAL PROVISIONS REGARDING PLEDGED ACCOUNTS
OR FUNDS...........................................-30-
SECTION 3.05 REPORTS BY TRUSTEE TO BONDHOLDERS.....................-32-
SECTION 3.06 PLEDGED ACCOUNTS REPORTS BY TRUSTEE...................-34-
SECTION 3.07 COLLECTIONS OF THE STUDENT LOANS......................-34-
SECTION 3.08 AMENDMENTS TO SERVICING AGREEMENT.....................-34-
SECTION 3.09 RESERVE FUND..........................................-35-
SECTION 3.10 COST OF ISSUANCE ACCOUNT..............................-36-
SECTION 3.11 FUNDING OWNER PAYMENTS................................-36-
ARTICLE IV
SECURITY FOR THE BONDS..........................................-41-
SECTION 4.01 GRANT OF TRUST ESTATE..................................-41-
SECTION 4.02 DOCUMENTS DELIVERED TO TRUSTEE.........................-42-
SECTION 4.03 ACCEPTANCE BY TRUSTEE..................................-42-
SECTION 4.04 LIMITED WITHDRAWAL AND SUBSTITUTION OF
COLLATERAL..........................................-42-
SECTION 4.05 RELEASE OF TRUST ESTATE................................-43-
SECTION 4.06 OPINION OF COUNSEL.....................................-44-
-vii-
<PAGE>
ARTICLE V
SATISFACTION AND DISCHARGE......................................-45-
SECTION 5.01 SATISFACTION AND DISCHARGE OF INDENTURE................-45-
SECTION 5.02 APPLICATION OF TRUST MONEY.............................-46-
SECTION 5.03 TRUSTEE'S AUTHORITY; RELEASE OF PREPAID
STUDENT LOANS........................................-46-
ARTICLE VI
DEFAULTS AND REMEDIES...........................................-47-
SECTION 6.01 EVENT OF DEFAULT.......................................-47-
SECTION 6.02 ACCELERATION OF MATURITY; RESCISSION
AND ANNULMENT.......................................-48-
SECTION 6.03 REMEDIES................................................-49-
SECTION 6.04 PRESERVATION OF TRUST ESTATE............................-49-
SECTION 6.05 TRUSTEE MAY FILE PROOFS OF CLAIM........................-50-
SECTION 6.06 TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF BONDS..................................-51-
SECTION 6.07 APPLICATION OF MONEY COLLECTED..........................-51-
SECTION 6.08 LIMITATION ON SUITS.....................................-52-
SECTION 6.09 RESTORATION OF RIGHTS AND REMEDIES......................-52-
SECTION 6.10 RIGHTS AND REMEDIES CUMULATIVE..........................-53-
SECTION 6.11 DELAY OR OMISSION NOT WAIVER............................-53-
SECTION 6.12 CONTROL BY CONTROL PARTY................................-53-
SECTION 6.13 WAIVER OF PAST DEFAULTS.................................-53-
SECTION 6.14 UNDERTAKING FOR COSTS...................................-53-
SECTION 6.15 WAIVER OF STAY OR EXTENSION LAWS........................-54-
-viii-
<PAGE>
SECTION 6.16 SALE OF TRUST ESTATE....................................-54-
SECTION 6.17 ACTION ON BONDS.........................................-55-
SECTION 6.18 NO RECOURSE TO ISSUER...................................-55-
SECTION 6.19 UNCONDITIONAL RIGHTS OF BONDHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST...............................-55-
ARTICLE VII
THE TRUSTEE......................................................-57-
SECTION 7.01 DUTIES OF TRUSTEE.......................................-57-
SECTION 7.02 NOTICE OF DEFAULT.......................................-58-
SECTION 7.03 CERTAIN RIGHTS OF TRUSTEE...............................-58-
SECTION 7.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF BONDS.......-59-
SECTION 7.05 MAY HOLD BONDS..........................................-59-
SECTION 7.06 MONEY HELD IN TRUST.....................................-59-
SECTION 7.07 COMPENSATION AND REIMBURSEMENT..........................-59-
SECTION 7.08 ELIGIBILITY; DISQUALIFICATION...........................-60-
SECTION 7.09 TRUSTEE'S CAPITAL AND SURPLUS...........................-61-
SECTION 7.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.......-61-
SECTION 7.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..................-62-
SECTION 7.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS OF TRUSTEE...............................-62-
SECTION 7.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER........-63-
SECTION 7.14 CO-TRUSTEES AND SEPARATE TRUSTEES.......................-63-
ARTICLE VIII
BONDHOLDERS' LIST AND REPORTS....................................-65-
-ix-
<PAGE>
SECTION 8.01 ISSUER TO FURNISH TRUSTEE NAMES AND
ADDRESSES OF BONDHOLDERS.............................-65-
SECTION 8.02 PRESERVATION OF INFORMATION; COMMUNICATIONS
TO BONDHOLDERS.......................................-65-
SECTION 8.03 REPORTS BY TRUSTEE......................................-65-
SECTION 8.04 REPORTS BY ISSUER.......................................-66-
ARTICLE IX
COVENANTS OF ISSUER..............................................-67-
SECTION 9.01 MAINTENANCE OF OFFICE OR AGENCY.........................-67-
SECTION 9.02 MONEY FOR BOND PAYMENTS TO BE HELD IN TRUST.............-67-
SECTION 9.03 ISSUER'S EXISTENCE......................................-68-
SECTION 9.04 PROTECTION OF TRUST ESTATE..............................-69-
SECTION 9.05 PERFORMANCE OF OBLIGATIONS..............................-69-
SECTION 9.06 NEGATIVE COVENANTS......................................-70-
SECTION 9.07 SERVICER'S ANNUAL STATEMENT AS TO COMPLIANCE............-70-
SECTION 9.08 CORPORATE EXISTENCE OF OWNER TRUSTEE....................-70-
SECTION 9.09 NO OTHER BUSINESS.......................................-71-
SECTION 9.10 NO BORROWING............................................-71-
SECTION 9.11 OBLIGATIONS OF THE SERVICER.............................-71-
SECTION 9.12 SERVICER'S EVIDENCE AS TO COMPLIANCE....................-71-
ARTICLE X
SUPPLEMENTAL INDENTURES..........................................-73-
SECTION 10.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF BONDHOLDERS..-73-
SECTION 10.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS.....-74-
-x-
<PAGE>
SECTION 10.03 EXECUTION OF SUPPLEMENTAL INDENTURES....................-76-
SECTION 10.04 EFFECT OF SUPPLEMENTAL INDENTURES.......................-76-
SECTION 10.05 CONFORMITY WITH TRUST INDENTURE ACT.....................-76-
SECTION 10.06 REFERENCE IN BONDS TO SUPPLEMENTAL INDENTURES...........-76-
ARTICLE XI
REDEMPTION OF BONDS..............................................-77-
SECTION 11.01 REDEMPTION AT THE OPTION OF THE ISSUER;
ELECTION TO REDEEM...................................-77-
SECTION 11.02 NOTICE TO TRUSTEE AND THE BOND INSURER..................-77-
SECTION 11.03 NOTICE OF ISSUER REDEMPTION.............................-77-
SECTION 11.04 DEPOSIT OF REDEMPTION PRICE.............................-78-
SECTION 11.05 BONDS PAYABLE ON REDEMPTION DATE........................-78-
ARTICLE XII
BONDHOLDERS' MEETING.............................................-79-
SECTION 12.01 PURPOSES FOR WHICH MEETINGS MAY BE CALLED...............-79-
SECTION 12.02 MANNER OF CALLING MEETINGS..............................-79-
SECTION 12.03 CALL OF MEETING BY ISSUER OR BONDHOLDERS................-79-
SECTION 12.04 WHO MAY ATTEND AND VOTE AT MEETINGS.....................-80-
SECTION 12.05 REGULATIONS MAY BE MADE BY TRUSTEE......................-80-
SECTION 12.06 MANNER OF VOTING AT MEETINGS AND RECORDS
TO BE KEPT...........................................-81-
SECTION 12.07 EXERCISE OF RIGHTS OF TRUSTEE AND BONDHOLDERS
NOT TO BE HINDERED OR DELAYED........................-81-
ARTICLE XIII
MISCELLANEOUS....................................................-82-
-xi-
<PAGE>
SECTION 13.01 COMPLIANCE CERTIFICATES AND OPINIONS....................-82-
SECTION 13.02 FORM OF DOCUMENTS DELIVERED TO TRUSTEE..................-82-
SECTION 13.03 ACTS OF BONDHOLDERS.....................................-83-
SECTION 13.04 NOTICES.................................................-84-
SECTION 13.05 NOTICES AND REPORTS TO BONDHOLDERS; WAIVER
OF NOTICES...........................................-85-
SECTION 13.06 CONFLICT WITH TRUST INDENTURE ACT.......................-85-
SECTION 13.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS................-85-
SECTION 13.08 SUCCESSORS AND ASSIGNS..................................-86-
SECTION 13.09 SEPARABILITY............................................-86-
SECTION 13.10 BENEFITS OF INDENTURE...................................-86-
SECTION 13.11 LEGAL HOLIDAYS..........................................-86-
SECTION 13.12 GOVERNING LAW...........................................-86-
SECTION 13.13 COUNTERPARTS............................................-86-
SECTION 13.14 TRUST OBLIGATION........................................-87-
SECTION 13.15 AUTHORITY OF THE ADMINISTRATOR..........................-87-
SECTION 13.16 NO PETITION.............................................-87-
-xii-
<PAGE>
EXHIBIT A Form of Bonds
EXHIBIT B Servicing Agreement
EXHIBIT C Custodial Agreement
EXHIBIT D Administration Agreement
EXHIBIT E DTC Letter Agreement
SCHEDULE I Schedule of Student Loans
SCHEDULE II Calculation of Servicing Fee
-xiii-
<PAGE>
INDENTURE, dated as of November 1, 1997, between THE NATIONAL
COLLEGIATE TRUST 1997-S2 (the "Issuer"), a Delaware business trust created
pursuant to the Trust Agreement and acting through DELAWARE TRUST CAPITAL
MANAGEMENT, INC., not in its individual capacity but solely as Owner Trustee
under the Trust Agreement and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company (the "Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Bonds hereunder. All covenants and
agreements made by the Issuer herein are for the benefit and security of the
Bond Insurer, the Bondholders and the Trustee. 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.
<PAGE>
-2-
ARTICLE I
DEFINITIONS
SECTION 1.01 General Definitions.
Except as otherwise specified or as the context may otherwise require,
the following terms have the meanings set forth below for all purposes of this
Indenture, and the definitions of such terms are applicable to the singular as
well as to the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
"Accountants": A firm of independent certified public accountants of
national reputation, which may be the firm of independent accountants that
audits the financial statements of the Issuer.
"Act" And "Act Of Bondholders": The meanings specified in Section
13.03.
"Administrator": First Marblehead Data Services Inc. or its successor
under the Administration Agreement.
"Administration Agreement": The Administration Agreement, dated as of
November 1, 1997, among the Issuer, the Trustee and the Administrator, a copy of
which is attached hereto as Exhibit D.
"Affiliate": 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.
"Agent": Any Bond Registrar or Paying Agent.
"Aggregate Current Principal Amount": The aggregate of the Current
Principal Amounts of all Bonds Outstanding at the time of determination.
"Authorized Officer": With respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and, so long as the Administration Agreement is in effect, any
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement.
<PAGE>
-3-
"Available Payment Amount": With respect to a Payment Date, an amount
equal to the sum of (a) the aggregate amount of Servicer Remittances deposited
in the Collateral Proceeds Account during the related Collection Period, plus
(b) net liquidation proceeds related to Defaulted Student Loans received by the
Servicer during the related Collection Period, plus (c) the aggregate amount of
reinvestment income thereon deposited in the Collateral Proceeds Account with
respect to the related Collection Period, including late payment charges on the
Student Loans, if any, plus (d) amounts on deposit in the Reserve Fund in excess
of the Interest Reserve Amount, plus (e) any Insured Payments, plus (f) any
Funding Owner Payments, plus (g) any indemnification, repurchase or other
similar proceeds received by the Trustee during the related Interest Accrual
Period.
"Bana": Bank of American National Association.
"Bondholder" Or "Holder": The Person in whose name a Bond is registered
in the Bond Register.
"Bond Insurance Policy": That certain financial guaranty insurance
policy for the benefit of the Bondholders, pursuant to which MBIA is
guaranteeing payment of the principal and interest of the Bonds.
"Bond Insurer": MBIA.
"Bond Insurer Default": (i) the occurrence and continuance of any
failure of the Bond Insurer to make a payment under the Bond Insurance Policy or
under the Surety Bond in accordance with its terms, or (ii)(a) the entry of a
decree or order of the New York Department of Insurance or a court or agency
having jurisdiction in respect of the Bond Insurer in an involuntary case under
any present or future Federal or state bankruptcy, insolvency, rehabilitation,
liquidation, conservation, dissolution, or similar law or appointing a
conservator or receiver or liquidator or rehabilitator or other similar official
of the Bond Insurer or of any substantial part of its property, or the entering
of an order for the winding up, rehabilitation, conservation, dissolution or
liquidation of the affairs of the Bond Insurer and the continuance of any such
decree or order undischarged or unstayed and in force for a period of 90
consecutive days; (b) the Bond Insurer shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshaling of assets and liabilities,
rehabilitation, liquidation, conservation, dissolution or similar proceedings of
or relating to the Bond Insurer or of or relating to all or substantially all of
its property; or (c) the Bond Insurer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take advantage of
or otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, rehabilitation, liquidation, conservation, dissolution,
reorganization or other similar statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations.
"Bond Insurer's Fiscal Agent": State Street Bank and Trust Company, a
Massachusetts trust company, until a successor Person shall have become the Bond
Insurer's Fiscal Agent
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appointed by the Bond Insurer and thereafter "Bond Insurer's Fiscal Agent" shall
mean such successor Person.
"Bond Interest Rate": The interest rate on the Bonds, which shall be
7.24% per annum.
"Bond Owner": With respect to a Book-Entry Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of the Depository or on
the books of a Person maintaining an account with the Depository (directly or as
an indirect participant, in accordance with the rules of the Depository).
"Bond Register" And "Bond Registrar": The respective meanings specified
in Section 2.05.
"Bonds": Any one of the 7.24% Collateralized Student Loan Bonds Series
1997-S2 authorized by, and authenticated and delivered under, this Indenture
substantially in the form of Exhibit A hereto.
"Book-entry Bonds": Bonds where ownership and transfers of beneficial
ownership interests are made through book-entries by the Depository as described
in Section 2.09; provided, that after the occurrence of a condition whereupon
book-entry registration is no longer permitted, definitive Bonds shall be issued
to the Bond Owners of Bonds, and such Bonds shall no longer be "Book-Entry
Bonds."
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the City of Boston, the City of New
York or in the city in which the Corporate Trust Office is located are
authorized or obligated by law or executive order to be closed.
"Closing Date": December 3, 1997.
"Code": The Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Collateral": The Trust Estate securing the Bonds.
"Collateral Proceeds": With respect to the Student Loan Collateral, the
amount of each monthly installment of principal and interest payable to the
holder of such Student Loan on the Due Date in accordance with the terms of the
Student Loan Note evidencing such Student Loan.
"Collateral Proceeds Account": The trust account or accounts created
and maintained pursuant to Section 3.03.
"Collection Period": With respect to each Payment Date, the six-month
period ending on the 15th day of the calendar month in which the related Payment
Date occurs.
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"Commission": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or if at any time such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time under the Trust Indenture Act or similar legislation
replacing the Trust Indenture Act.
"Commitment Letter": That certain letter of commitment from the Bond
Insurer to the Issuer with respect to the Bond Insurance Policy dated as of
December 3, 1997 and that certain letter of commitment from the Bond Insurer to
the Issuer with respect to the Surety Bond dated as of December 3, 1997.
"Control Party": The Bond Insurer so long as any Bonds are Outstanding
or any Reimbursement Amounts are owed and no Bond Insurer Default exists or, if
a Bond Insurer Default then exists and Bonds are Outstanding, Holders of not
less than 66 2/3 % of the Aggregate Current Principal Amount of the Outstanding
Bonds.
"Corporate Trust Office": The principal corporate trust office of the
Trustee located at 225 Franklin Street, Boston, Massachusetts 02110, or at such
other address as the Trustee may designate from time to time by notice to the
Bondholders and the Issuer or the principal corporate trust office of any
successor Trustee. Any notices to the Trustee should be mailed to Attention:
Corporate Trust Department.
"Costs Of Issuance": Any amounts incurred as a cost or expense by the
Issuer in connection with the issuance of the Bonds and authorized to be paid
out of the Cost of Issuance Account by an Issuer Order including, but not
limited to the amounts specified in the Commitment Letter with respect to fees,
expenses and disbursements and the legal fees and disbursements incurred by MBIA
in connection with the issuance of the Policies.
"Cost Of Issuance Account": The trust account created and maintained
pursuant to Section 3.10.
"Cost Of Issuance Amount": $395,000.
"Current Principal Amount": With respect to any Bond as of any date, an
amount equal to:
(a) the original principal amount of such Bond, minus
(b) all prior payments, if any, made with respect to principal of such
Bond.
"Custodial Agreement": The agreement, dated as of November 1, 1997, by
and among the Servicer, as custodian, the Issuer and the Trustee, pursuant to
which the Servicer agrees to act as custodian with respect to the Student Loans,
as such agreement may be amended or supplemented from time to time, a copy of
which is attached hereto as Exhibit C.
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"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default or when used in accordance with
obligations created by any agreement other than this Indenture, the meaning
specified in such agreement.
"Defaulted Student Loan": Any Student Loan that is more than 150 days
delinquent.
"Deficiency Amount": Shall have the meaning set forth in the Bond
Insurance Policy or in the Surety Bond, as the case may be.
"Definitive Bonds": As defined in Section 2.09.
"Demand For Payment": A demand for payment delivered to the Bond
Insurer under the Surety Bond for a Funding Owner Payment.
"Depository": The Depository Trust Company, and any successor thereto
or substitute therefor in its capacity as depository of Book-Entry Bonds.
"Depository Notice Date": As defined in Section 2.09.
"Depository Participants": A broker, dealer, bank, other financial
institution or other person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Dtc Letter Agreement": The Depository Letter Agreement among the
Issuer, the Trustee and the Depository, dated as of December 2, 1997,
substantially in the form of Exhibit E hereto, as such DTC Letter Agreement may
be amended from time to time.
"Due Date": Each date on which Collateral Proceeds are due and payable
with respect to each Student Loan.
"Eligible Investments": One or more of the following:
(i) direct general obligations of, or obligations fully and
unconditionally guar anteed as to the payment of principal and interest
by the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) rated "A" or higher by S&P and rated "A2" or higher by
Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause (i)
above and must (a) be valued daily at current market price plus accrued
interest, (b) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such
collateral and
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(c) be delivered to the Trustee or, if the Trustee is supplying the collateral,
an agent for the Trustee, in such a manner as to accomplish perfection of a
security interest in the collateral by possession of certified securities;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances issued by any bank or trust
company incorporated under the laws of the United States or any state
thereof and subject to supervision and examination in federal
or state banking authorities, provided that at the time of such
investment or contractual commitment providing for such investment, the
short term unsecured debt obligations of such bank or trust company at
the date of acquisition thereof have been rated by each Rating Agency
in its highest rating category and in one of the two highest rating
categories by S&P; provided that each such investment has an original
maturity of not more than 365 days;
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each Rating Agency and S&P in its highest short-term
rating available; provided that such commercial paper shall have a
remaining maturity of not more than 30 days;
(v) a money market fund rated by each Rating Agency in its
highest rating available and one of the two highest rating categories
of S&P at the time of such investment which invests only in other
Eligible Investments; and
(vi) other obligations or securities that are acceptable to
the Bond Insurer and the Rating Agencies as an Eligible Investment
hereunder and will not result in a reduction in the then current rating
of the Bonds, as evidenced in writing;
provided, however, that no instrument shall be an Eligible Investment if it
represents either the right to receive (1) only interest with respect to the
obligations underlying such instrument or (2) both principal and interest
payments derived from the obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; and, provided further, that, Eligible Investments shall include
only such obligations or securities that mature on or before the Business Day
immediately preceding the next Payment Date, except that Eligible Investments to
be deposited in the Reserve Fund prior to the initial Principal Payment Date
shall mature on or before the Business Day immediately preceding the initial
Principal Payment Date. In addition, no Eligible Investment which incorporates a
penalty for early withdrawal will be used unless the maturity of such Eligible
Investment is on or before the Business Day immediately preceding the next
Payment Date.
"Event Of Default": The meaning specified in Section 6.01, or when used
in association with obligations created by any agreement other than this
Indenture, the meaning specified in such agreement.
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"FNBB": The First National Bank of Boston.
"Full Prepayment": A Student Loan prepayment in connection with the
occurrence of any of the following: (i) payment is made to the Servicer of 100%
of the outstanding principal balance of such Student Loan together with all
accrued and unpaid interest thereon, or (ii) payment is made to the Servicer of
all Liquidation Proceeds and other payments, if any, which have been determined
to be fully recoverable in the Servicer's reasonable judgment in respect of such
Student Loan.
"Funding Owner": The Owner Participants designated as such on Schedule
A to the Trust Agreement.
"Funding Owner Payments": All liquidity capital contributions and
mandatory capital contributions made by the Funding Owners pursuant to the Trust
Agreement and deposited in the Reserve Fund pursuant to Section 3.11 hereof.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of the
Student Loan Collateral or of any other instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including without limitation, the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Student Loan Collateral and all other funds 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 any thing that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Guaranty Fee": The insurance premium payable to the Bond Insurer,
consisting of an initial fee as specified in the Commitment Letter relating to
the Bond Insurance Policy payable on the Closing Date and an annual payment in
advance, commencing with the Payment Date on September 20, 1998 in an amount
equal to the product of (x) the Guaranty Fee Percentage and (y) the Aggregate
Current Principal Amount of the Outstanding Bonds as of the Closing Date
"Guaranty Fee Arrearage": Any unpaid Guaranty Fee, other than the
current annual period's Guaranty Fee.
"Guaranty Fee Percentage": The number of basis points payable on each
Payment Date as specified in paragraph 1 of the Commitment Letter for issuance
of the Bond Insurance Policy.
"Indenture": This instrument as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended. All references in this instrument to designated "Articles," "Sections,"
"Subsections" and other subdivisions are to the
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designated Articles, Sections, Subsections and other subdivisions of this
instrument as originally executed. The words "herein," "hereof," "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection or other subdivision.
"Independent": When used with respect to any specified Person means
such a Person who (i) is in fact independent of the Issuer and any other obligor
upon the Bonds, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer or in any such other obligor or in an
Affiliate of the Issuer or such other obligor, and (iii) is not connected with
the Issuer or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Bond Insurer and Trustee, such Person
shall be appointed by an Issuer Order and approved by the Bond Insurer and
Trustee in the exercise of reasonable care and such opinion or certificate shall
state that the signer has read this definition and that the signer is
Independent within the meaning thereof.
"Individual Bond": A Bond with an original principal amount equal to
not less than $25,000.
"Insured Payments": Shall have the meaning set forth in the Bond
Insurance Policy.
"Interest Accrual Period": With respect to each Payment Date, the
six-month period (or, for the initial Interest Payment Date, the period
commencing on the Closing Date) ending on the last day preceding the related
Payment Date.
"Interest Payment Date": With respect to any Bond, any date specified
as a Payment Date in Section 2.03 upon which a payment of interest is payable on
such Bond or, if such day is not a Business Day, on the first Business Day
thereafter.
"Interest Reserve Amount": With respect to any Interest Accrual Period,
an amount equal to the amount of interest payable on the then Outstanding Bonds
on the next succeeding Interest Payment Date.
"Issuer": The National Collegiate Trust 1997-S2, a Delaware business
trust, acting through the Owner Trustee. All actions by, and rights and
obligations of, the Owner Trustee under this Indenture and the Bonds are actions
by, and rights and obligations of, the Issuer. Subject to Section 13.15,
whenever any reference is made herein to any actions (including execution of
documents) to be taken by the Issuer, to any rights of the Issuer, or to any
obligations of the Issuer hereunder, such reference shall be construed to refer
to such actions being taken by, such rights being exercised by or such
obligation being performed by the Owner Trustee (not in its individual capacity
but solely as owner trustee under the Trust Agreement) on behalf of the Issuer,
and such actions by the Owner Trustee shall fully bind the Issuer or shall fully
rebound to the benefit of the Issuer, as the case may be.
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"Issuer Order" Or "Issuer Request": A written order or request signed
in the name of the Issuer by an Authorized Officer.
"Issuer Redemption": A redemption of Bonds pursuant to Section 11.01.
"Liquidation Proceeds": Amounts received and retained in connection
with the liquidation of Defaulted Student Loans, whether through acceleration or
otherwise.
"Loan Documents": The loan documents pertaining to a particular Student
Loan comprising the loan file delivered to, reviewed and held by the Servicer as
specified in Section 4.02.
"MBIA": MBIA Insurance Corporation and its successors and permitted
assigns.
"MBIA Documents": The Bond Insurance Policy, the Surety Bond and the
Reimbursement Agreement.
"Moody's": Moody's Investors Service, Inc.
"Net Loans Withdrawn": The meaning specified in Section 4.04.
"Notice Of Non-payment": Shall have the meaning set forth in the Bond
Insurance Policy.
"Note Rate": With respect to a Student Loan, the annual interest rate
to be paid by a Promisor under the terms of the related Student Loan Note.
"Officers' Certificate": With respect to the Issuer, a certificate
signed by two Authorized Officers. With respect to any other Person, a
certificate signed on behalf of such Person by an individual who is identified
in that certificate as being an officer of such Person or any other individual
authorized to execute the certificate.
"Opinion Of Counsel": A written opinion of counsel, addressed to the
Bond Insurer and the Trustee who may, except as otherwise expressly provided in
this Indenture, be counsel for the Issuer and who shall be satisfactory to the
Bond Insurer and the Trustee. Whenever an Opinion of Counsel is required
hereunder, such opinion may rely on opinions of other counsel.
"Origination Agreement": Collectively, (i) each Participation and Sale
Agreement, as amended from time to time, to be entered into between the Issuer
and an Owner Participant, (ii) the Origination Services Agreement, dated January
6, 1995, between The National Collegiate Trust and the Servicer, as such
Agreement may be amended or supplemented from time to time, relating to the
origination and sale of the Student Loan Collateral and (iii) each Origination
and Funding Agreement, to be entered into between FNBB and an Owner Participant
and (iv) each Loan Packaging and Funding Agreement, to be entered into between
BANA and an Owner Participant.
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"Outstanding": With respect to the Bonds, as of the date of
determination, all Bonds except:
(i) Bonds theretofore cancelled by the Bond Registrar or
delivered to the Bond Registrar for cancellation;
(ii) Bonds or portions thereof for which payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other then the Issuer) or set aside and
segregated in trust by the Issuer for the Holders of such Bonds;
provided, however, that if such Bonds are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision therefor, satisfactory to the Trustee;
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Bonds are
held by a holder in due course; and
(iv) Bonds alleged to have been destroyed, lost or stolen, or
Bonds mutilated and surrendered to the Trustee, for which replacement
Bonds have been issued as provided for in Section 2.06;
provided, however, that in determining whether the Holders of the requisite
percentage of the Aggregate Current Principal Amount of the Outstanding Bonds
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Bonds owned by the Issuer or any other obligor upon the Bonds
or any Affiliate of the Issuer or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Bonds that the Trustee knows to be
so owned shall be so disregarded. Bonds so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee that the pledgee is entitled so to act with respect
to such Bonds and that the pledgee is not the Issuer or any Affiliate of the
Issuer. Notwithstanding the foregoing, any Bond on which any portion of
principal or interest has been paid by the Bond Insurer pursuant to the Bond
Insurance Policy shall be Outstanding until the Bond Insurer has been reimbursed
in full therefor in accordance with the Reimbursement Agreement.
"Outstanding Obligations": As of any date, all accrued interest payable
on, and the then outstanding principal balance of, all Bonds issued under this
Indenture and all other amounts owing to Bondholders or to any Person under this
Indenture, including without limitation any amounts owed to the Bond Insurer.
"Owner Participant": Any educational institution holding all or any
portion of the beneficial ownership of the trust created pursuant to the Trust
Agreement.
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"Owner Trustee": Delaware Trust Capital Management, Inc., a Delaware
trust company, not in its individual capacity but solely as owner trustee under
the Trust Agreement, or such successor Person as shall have become owner trustee
pursuant to the applicable provisions of this Indenture and the Trust Agreement.
"Partial Prepayment": Any Promisor payment or other recovery of
principal of a Student Loan (other than a Full Prepayment) that is received in
advance of its scheduled Due Date and that is not accompanied by an amount as to
interest representing scheduled interest for any payment period subsequent to
the period in which it was received.
"Paying Agent": The Trustee or any other depository institution or
trust company that is authorized by the Issuer pursuant to Section 9.02 to pay
the principal of or interest on, any Bonds on behalf of the Issuer.
"Payment Date": Any day specified in Section 2.03 as an Interest
Payment Date or Princi pal Payment Date for the Bonds or, if such day is not a
Business Day, on the first Business Day thereafter.
"Payment Date Statement": As defined in Section 3.05.
"Person": Any individual, corporation, partnership, joint venture,
limited liability company, limited partnership, association, trust (including
any beneficiary thereof), estate, custodian, nominee, unincorporated
organization or government or any agency or political subdivision thereof.
"Pledged Account Or Fund": The Collateral Proceeds Account and the
Reserve Fund.
"Policies": The Bond Insurance Policy and the Surety Bond.
"Predecessor Bonds": With respect to any particular Bond, every
previous Bond evidencing all or a portion of the same debt as that evidenced by
such particular Bond; and, for the purpose of this definition, any Bond
authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or
stolen Bond (or a mutilated Bond surrendered to the Trustee) shall be deemed to
evidence the same debt as the lost, destroyed or stolen Bond (or a mutilated
Bond surrendered to the Trustee).
"Preference Amount": Shall have the meaning set forth in the Bond
Insurance Policy.
"Prepayment": A Full Prepayment or Partial Prepayment.
"Principal Payment Date": Any Payment Date specified in Section 2.03 on
which an installment of principal is due and payable or, if such day is not a
Business Day, on the first Business Day thereafter.
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"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Promisor": The Person indebted under a Student Loan.
"Rating Agency Or "Rating Agencies": Moody's Investors Service, Inc.
and Fitch Investors Service, Inc.
"Record Date": The date on which the Holders of Bonds entitled to
receive a payment of principal or interest (other than a payment in full of all
unpaid principal of a Bond) are determined, such date as to any Payment Date
being the last day of the month preceding the month of such Payment Date.
"Redemption Date": Any Payment Date on which Bonds may be redeemed at
the option of the Issuer pursuant to Sections 11.01(a), (b) or (c).
"Redemption Price": With respect to any Bond to be redeemed in whole or
in part pursuant to Section 11.01, an amount equal to (i) 100% of the Current
Principal Amount of the Bond to be so redeemed, together with all unpaid and
accrued interest on such Bond and (ii) amounts owing to the Bond Insurer under
the Reimbursement Agreement with respect to any such Bond to be redeemed.
"Reimbursement Agreement": The Insurance and Indemnification Agreement
dated as of the date hereof by and among the Issuer, the Trustee and MBIA
providing for, INTER ALIA, the reimbursement of MBIA for any payments made by
MBIA to the Bondholders and other amounts due thereunder.
"Reimbursement Amounts" means any amounts then due and owing to the
Bond Insurer under the Reimbursement Agreement.
"Reserve Fund": The trust account or accounts created and maintained
pursuant to Section 3.09.
"Responsible Officer": With respect to the Trustee, any corporate trust
officer or assistant corporate trust officer, or any other officer of the
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 his knowledge of and
famil iarity with the particular subject.
"Sale": As defined in Section 6.16.
"Schedule Of Student Loans": Schedule I hereto listing, by loan number,
name of Promisor and principal balance at the Closing Date of the Student Loans
being Granted to the Trustee on the Closing Date.
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"Servicer": The Pennsylvania Higher Education Assistance Agency, a
public corporation and a government instrumentality of the Commonwealth of
Pennsylvania, or any successor thereof, as servicer of the Student Loans
pursuant to the Servicing Agreement approved by the Bond Insurer, or any
assignee of all or substantially all of obligations under the Servicing
Agreement (including, but not limited to, collection agents) approved by the
Bond Insurer.
"Servicer Determination Date": The fifteenth (15th) day of each month
or, if such day is not a Business Day, the immediately preceding Business Day
(beginning with the month in which the Closing Date occurs) as of which the
Servicer determines the aggregate amount received with respect to the Student
Loans since the preceding Servicer Determination Date (or from the Closing Date
in the case of the first Servicer Determination Date).
"Servicer Remittance": The total amount of funds remitted to the
Trustee monthly by the Servicer pursuant to the Servicing Agreement, which
remittance shall include all monthly Collateral Proceeds collected by the
Servicer, less the Servicing Fee, together with any and all Prepayments received
by the Servicer.
"Servicer Remittance Report": Each monthly report prepared by the
Servicer pursuant to the Servicing Agreement.
"Servicing Agreement": The servicing agreement, dated January 6, 1995,
as amended by and between The National Collegiate Trust and the Servicer,
pursuant to which the Servicer agrees to perform certain servicing functions for
the Issuer relating to the Student Loans, as such agreement may be amended or
supplemented from time to time with the approval of the Bond Insurer, a copy of
which is attached hereto as Exhibit B.
"Servicing Fee": A monthly fee, computed as set forth on Schedule II
hereto.
"S&P": Standard and Poor's Ratings Services, Inc.
"Stated Maturity": With respect to any Bond, September 20, 2014, which
is the date on which the entire unpaid principal amount of such Bond is due and
payable.
"Stated Principal Balance": As of the Closing Date, for this purpose,
the Stated Principal Balance of each Student Loan is the outstanding principal
balance set forth on the Schedule of Student Loans. As of any other Date, the
Stated Principal Balance the then outstanding principal balance after giving
effect to all payments and recoveries of principal.
"Student Loan": Each of the student loans, which includes the related
Student Loan Notes, pledged to the Trustee as security for the Bonds, and all
renewals, extensions, substitutions and replacements thereof. The Student Loans
are listed on Schedule I hereto.
"Student Loan Collateral": The Student Loans securing the Bonds.
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"Student Loan Note": The promissory note or other evidence of
indebtedness of a Promisor with respect to a Student Loan.
"Surety Bond": That certain surety bond for the benefit of the
Bondholders pursuant to which MBIA is guaranteeing payment of the Funding Owner
Payments.
"Surety Fee ": The insurance premium payable to the Bond Insurer,
consisting of an initial fee as specified in the Commitment Letter relating to
the Surety Bond payable on the Closing Date and an annual payment in advance,
commencing with the Payment Date on September 20, 1998 in an amount equal to the
sum of the applicable surety amounts and the applicable percentages for each
Funding Owner, as specified in the Commitment Letter relating to the Surety
Bond.
"Surety Fee Arrearage ": Any unpaid Surety Fee, other than the current
annual period's Surety Fee.
"Transaction Documents": The Custodial Agreement, DTC Letter Agreement,
Indenture, Servicing Agreement, and Trust Agreement.
"Trust Agreement": The trust agreement, dated as of November 1, 1997,
between The National Collegiate Trust and the Trust Company, as amended or
restated from time to time.
"Trust Company": Delaware Trust Capital Management, Inc., a Delaware
trust company, or its successor under the Trust Agreement, in its individual
capacity.
"Trust Estate": As defined in Section 4.01.
"Trust Indenture Act" Or "TIA": The Trust Indenture Act of 1939 as in
force at the Closing Date, unless otherwise specifically provided.
"Trustee": State Street Bank and Trust Company, a Massachusetts trust
company, until a successor Person shall have become the Trustee pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Person.
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ARTICLE II
THE BONDS
SECTION 2.01 Forms Generally.
The Bonds issuable hereunder shall be issued in a single class. The
Bonds and the Trustee's certificate of authentication shall be in substantially
the forms set forth in this Article II, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture or as may in the Issuer's judgment be necessary, appropriate or
convenient to permit the Bonds to be issued and sold or held in bearer form, to
establish entitlement to an exemption from United States withholding tax or
reporting requirements with respect to payments on the Bonds or to comply, or
facilitate compliance, with other applicable laws or regulations, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which the Bonds may be listed, or as may, consistently
herewith, be determined by the officers executing such Bonds, as evidenced by
their execution thereof. While Bonds may contain the above referenced provisions
with respect to Bonds issued in bearer form, no Bonds may actually be issued in
bearer form until the Issuer and the Trustee shall have entered into an
appropriate supple mental indenture pursuant to Section 10.01(7) providing for
such issuance. Any portion of the text of any Bond may be set forth on the
reverse thereof with an appropriate reference on the face of the Bond.
The definitive Bonds shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders, or may
be typewritten or photocopied, or may be produced in any other manner permitted
by the rules of any securities exchange on which the Bonds may be listed, all as
determined by the officers executing such Bonds, as evidenced by their execution
thereof.
SECTION 2.02 Forms Of Bonds.
The form of the Bonds issued and authenticated hereunder shall be in
substantially the form of Exhibit A.
SECTION 2.03 General Provisions With Respect To Principal
And Interest Payments; Denominations.
The aggregate principal amount of Bonds that may be authenticated and
delivered under this Indenture is limited to the principal amount of Bonds
issued on the Closing Date except for Bonds authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Bonds
pursuant to Section 2.05 or 2.06 of this Indenture. The Bonds shall have the
following characteristics:
<PAGE>
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Original Bond
Principal Interest Stated
Amount Rate Maturity
--------- -------- --------
$8,250,000 7.24% September 20, 2014
The Interest Payment Dates for the Bonds are March 20 and September 20,
commencing March 20, 1998. The Principal Payment Dates for the Bonds are March
20 and September 20, commencing on September 20, 2001.
The Bonds shall have the Stated Maturity specified above. The principal
of each Bond shall be payable as set forth herein (a) beginning no later than
the first Principal Payment Date and (b) ending no later than the Stated
Maturity unless the unpaid principal of such Bond becomes due and payable at an
earlier date by declaration of acceleration, redemption or otherwise.
Subject to the Issuer's obligation to pay interest on the Bonds in
accordance with their terms and to its obligation to retire the Bonds on or
before their Stated Maturity, the aggregate amount of principal and interest on
the Bonds due and payable on each Payment Date shall be payable from the amounts
held in the Collateral Proceeds Account and the Reserve Fund in excess of the
Interest Reserve Amount on such Payment Date as applied in accordance with the
terms hereof. All payments made with respect to any Bond shall be applied first
to the interest then due and payable on such Bond and then to the principal
thereof. All computations of interest accrued on any Bond shall be made as if
each year consisted of twelve months of thirty days each. Interest on the unpaid
principal amount of each Outstanding Bond shall be payable on each Interest
Payment Date at the Bond Interest Rate for the related Interest Accrual Period.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Bonds, if the Bonds 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 6.04 are not applicable, then payments of
principal of and interest on such Bonds shall be made in accordance with Section
6.07.
All Bonds shall be identical in all respects except for the
denominations and dates thereof. All Bonds issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority (except to the extent set forth in Section 3.03(c) and 6.07
hereof) or distinction on account of the actual time or times of authentication
and delivery, all in accordance with the terms and provisions of this Indenture.
Payments of principal and interest on the Bonds shall be made pro-rata
among all Outstanding Bonds, without preference or priority of any kind.
<PAGE>
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Each Bond shall be issuable only as registered Bonds in denominations
of $25,000 and integral multiples of $1,000 in excess thereof (except that one
Bond may be issued in a different
principal amount as necessary to include the remainder of the aggregate
authorized principal of such Bond).
SECTION 2.04 Execution, Authentication, Delivery And Dating.
(a) The Bonds shall be executed on behalf of the Issuer by one of the
Authorized Officers of the Owner Trustee under its corporate seal, which may be
in facsimile form and be imprinted or otherwise reproduced thereon and attested
by one of the Authorized Officers of the Owner Trustee. The signature of any of
these officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signatures of individuals who
were at any time the proper 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 Bonds or did not hold
such offices at the date of such Bonds.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Bonds executed by the Owner Trustee on
behalf of the Issuer to the Trustee for authentication, and the Trustee shall
authenticate and deliver such Bonds as in this Indenture provided and not
otherwise. Each Bond shall be dated as of the date of its authentication.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form set forth in the form of
Bonds in Exhibit A, executed by the Trustee by the manual signature of one of
its authorized officers and such certificate upon any Bond shall be conclusive
evidence, and the only evidence, that such Bond has been duly authenticated and
delivered hereunder.
(b) On the Closing Date, the Bonds shall be executed by the Owner
Trustee on behalf of the Issuer and delivered to the Trustee for authentication
and thereupon the same shall be authenticated and delivered by the Trustee upon
Issuer Request and upon receipt by the Bond Insurer and Trustee or their agents
of the following:
(i) an Officer's Certificate of the Issuer evidencing the
authorization of the execution, authentication and delivery of the
Bonds and specifying the Stated Maturity, the principal amount and Bond
Interest Rate of each Bond to be authenticated and delivered;
(ii) either (A) a certificate or other official document
evidencing the due authorization, approval or consent of any
governmental body or bodies, at the time having jurisdiction in the
premises, together with an Opinion of Counsel that the Bond Insurer and
the Trustee is entitled to rely thereon and that the authorization,
approval or consent of no other governmental body is required for the
valid issuance, or (B) an Opinion of Counsel that no such
authorization, approval or consent of any governmental body is required
<PAGE>
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except for such registrations, if any, as are required under the
Securities Act of 1933, the TIA and the "Blue Sky" securities laws of
any state;
(iii) an Opinion of Counsel dated not earlier than the Issuer
Request, to the effect that:
(A) all instruments furnished to the Bond Insurer and
the Trustee in connection with the Bonds conform in all
material respects to the requirements of this Indenture and
constitute sufficient authority hereunder for the Trustee to
authenticate and deliver the Bonds;
(B) all conditions precedent provided for in this
Indenture relating to the authentication and delivery of the
Bonds have been complied with and the Issuer is duly entitled
to the authentication and delivery of the Bonds;
(C) all laws and requirements with respect to the
execution and delivery by the Issuer of the Bonds have been
complied with;
(D) the Issuer has corporate power and authority to
execute, deliver and perform under this Indenture and to issue
the Bonds and has duly taken all necessary corporate action
for those purposes;
(E) this Indenture is, and the Bonds when issued,
delivered, authenticated and paid for, will be, the valid,
legal and binding obligations of the Issuer enforceable in
accordance with their terms, subject to bankruptcy,
reorganization, insolvency and other laws affecting the
enforcement of creditors' rights generally and to general
principles of equity (regardless whether such enforceability
is considered in a Proceeding in equity or at law);
(F) the Bonds, when issued, will be entitled to the
benefits of this Indenture;
(G) such action has been taken with respect to
delivery of the Trust Estate and with respect to recording and
filing of this Indenture and any other requisite documents as
is necessary to make effective and to perfect the lien and
security interest of this Indenture as a first priority lien
and security interest of this Indenture in the Trust Estate;
(H) this Indenture has been duly qualified under the
TIA; and
(I) the Issuer has the power and authority to assign,
pledge and deposit the Trust Estate with the Trustee as
security for the Bonds and has duly authorized such
assignment, pledge and deposit with the Trustee by all
necessary action.
<PAGE>
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(iv) the Loan Documents;
(v) an Officer's Certificate of the Issuer on which the Bond
Insurer can rely stating that the issuance of the Bonds will not result
in a breach of any of the terms, conditions or provisions of, or
constitute a default under, the Issuer's certificate of trust or any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Issuer is a party or by which it is bound, or any order of
any court or administrative agency entered in any Proceeding to which
the Issuer is a party or by which it may be bound or to which it may be
subject; and that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Bonds have been
complied with;
(vi) a certificate or opinion, meeting all applicable
requirements of TIA ss.314(d)(2) and (3), as to the fair value of the
Student Loan Collateral securing the Bonds and of any Eligible
Investments to be deposited on the Closing Date into any Pledged
Account or Fund on which the Bond Insurer can rely;
(vii) the MBIA Documents; and
(vii) such other documents as the Bond Insurer and the Trustee
may reasonably require.
SECTION 2.05 Registration, Registration Of Transfer And Exchange.
(a) The Issuer shall cause to be kept a register (the "Bond Register")
in which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and the registration of transfers
and exchanges of Bonds in certificated form. The Trustee is hereby initially
appointed "Bond Registrar" for the purpose of registering Bonds and transfers of
Bonds in certificated form as herein provided. Upon any resignation of any Bond
Registrar appointed by the Issuer, the Issuer shall promptly appoint a successor
or, in the absence of such appointment, shall assume the duties of Bond
Registrar.
If the Trustee shall at any time not be authorized to keep and maintain
the Bond Register, the Trustee shall have the right to inspect such Bond
Register at all reasonable times and to rely conclusively upon a certificate of
the Person in charge of the Bond Register as to the names and addresses of the
holders of the Bonds and the principal amounts and numbers of such Bonds as
held.
(b) Upon surrender for registration of transfer or exchange of any Bond
in certificated form at the office or agency of the Issuer to be maintained as
provided in Section 9.01, the Issuer shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Bonds of any authorized denominations and of a like
aggregate initial principal amount.
<PAGE>
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At the option of the Holder, Bonds in certificated form may be
exchanged for other Bonds of any authorized denominations of a like aggregate
initial principal amount, upon surrender of the Bonds to be exchanged at such
office or agency. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and deliver, the Bonds that
the Bondholder making the exchange is entitled to receive.
All Bonds in certificated form issued upon any registration of transfer
or exchange of Bonds shall be the valid obligations of the Issuer, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Bonds surrendered upon such registration of transfer or exchange.
(c) Every Bond in certificated form presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
(d) No transfer of a Bond or any interest therein may be made to, and a
prospective transferee shall deliver a certification to the Trustee that it is
not: (i)(A) an employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested (each, a "Plan"), that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Internal
Revenue Code of 1986 (the "Code"), or (B) a person that is directly or
indirectly purchasing such Bond or interest therein on behalf of, as named
fiduciary of, as trustee of, or with assets of such a plan, unless the
prospective transferee provides to the Trustee a certification of facts and an
Opinion of Counsel that establish to the satisfaction of the Trustee that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or cause the Servicer or the Trustee to be deemed a fiduciary of
such plan or result in the imposition of an excise tax under Section 4975 of the
Code; or (ii) any other Person that does not provide a certification to the
Trustee that (i)(A) and (i)(B) do not apply.
A Bond Owner of a Book-Entry Bond shall be entitled to transfer
beneficial ownership of such Book-Entry Bond only upon compliance with the
procedures established by such Bond Owner's brokerage firm and by the
participating firms acting as such brokerage firm's agent, if any. No Bond Owner
shall be entitled to receive a certificate evidencing ownership of his Book-
Entry Bond.
No service charge shall be made for any registration of transfer or
exchange of Bonds, but the Issuer or the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge as may be imposed in
connection with any registration of transfer or exchange of Bonds, other than
exchanges pursuant to Section 2.06 not involving any transfer.
Any other provision contained herein to the contrary notwithstanding,
the Bond Insurer shall be entitled, without charge therefor, at any time: to
register, discharge from registration or transfer registration of any Bond which
it holds upon presenting it to the Trustee. The Bond
<PAGE>
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Insurer is entitled to have access to and to make copies of the Bond Register at
any reasonable time upon reasonable prior notice to the Trustee.
SECTION 2.06 Mutilated, Destroyed, Lost Or Stolen Bonds.
If (a) any mutilated Bond is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Bond, and (b) there is delivered to the Trustee such security or indemnity as
may be required by the Trustee to save the Trustee and the Issuer harmless,
then, in the absence of notice to the Issuer or the Trustee that such Bond has
been acquired by a bona fide purchaser, the Issuer shall execute and upon its
request the Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Bond, a new Bond or Bonds of
the same tenor and aggregate initial principal amount bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Bond shall have become or shall be about to become due
and payable, or shall have become subject to redemption in full, instead of
issuing a new Bond, the Issuer may pay such Bond without surrender thereof,
except that any mutilated Bond shall be surrendered. If, after the delivery of
such new Bond or payment of a destroyed, lost or stolen Bond pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Bond in
lieu of which such new Bond was issued presents for payment such original Bond,
the Issuer and the Trustee shall be entitled to recover such new Bond (or such
payment) from the Person to whom it was delivered or any Person taking such new
Bond from 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 expenses incurred by the Issuer or the Trustee in
connection therewith.
Upon the issuance of any new Bond under this Section, the Trustee or
the Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) in
connection therewith.
Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Bonds duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Bonds.
SECTION 2.07 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Bond Insurer, the Trustee, any Agent and any other agent of the
Issuer or the Trustee may treat the Person in whose name any bond is registered
as the owner of such Bond (a) on the applicable
<PAGE>
-23-
Record Date for the purpose of receiving payments of the principal of (other
than the payment in full of the unpaid principal balance of such Bond) and
interest on such Bond and (b) on any other date for all other purposes
whatsoever, whether or not such Bond is overdue, and, except as otherwise
required by applicable law, neither the Issuer, the Bond Insurer, the Trustee,
any Agent nor any other agent of the Issuer, the Bond Insurer, or the Trustee
shall be affected by notice to the contrary.
SECTION 2.08 Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange
or redemption shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Issuer may
at any time deliver to the Trustee for cancellation any Bond previously
authenticated and delivered hereunder that the Issuer may have acquired in any
manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the
Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bonds
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Bonds held by the Trustee shall be destroyed unless the
Issuer shall direct by an Issuer Order that they be returned to the Issuer.
SECTION 2.09 Book-entry Bonds.
The Bonds will be Book-Entry Bonds. The Bonds shall be represented by a
single bond certificate in the original principal amount of the Bonds. The
Issuer hereby designates The Depository Trust Company, 55 Water Street, New
York, New York 10041, as the initial Depository for the Book-Entry Bonds and
directs the Trustee to execute and deliver the DTC Letter Agreement. The bond
certificates representing the Book-Entry Bonds shall be registered in the name
of the nominee of the Depository designated in the DTC Letter Agreement, CEDE &
Co. The Trustee shall not register the transfer of any Book-Entry Bond to
another depository until the Issuer shall have delivered or caused to be
delivered to the Trustee a written acceptance by the proposed transferee of the
duties of acting as depository with respect to Book-Entry Bonds and an Opinion
of Counsel to the effect that the proposed transferee is an entity registered as
a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended and to the further effect that all other conditions precedent
for such registration of transfer have been completed. The Trustee shall be
under no liability to any Person for any such registration or for making any
payments due on such Bonds to the Holder thereof or for taking any other action
with respect to such Holder under the provisions of this Indenture so long as
the transfer was registered upon receipt of the Opinion of Counsel described
above. Any Bond Owner acquiring an interest in a Book-Entry Bond through the
Depository or its participating organizations ("Depository Participants") shall
not be entitled to receive a certificate representing any interest in the Bonds
except in the event that fully-registered, certificated Bonds are issued to Bond
Owners ("Definitive Bonds") under the circumstances set forth in this Section.
As long as the Outstanding Bonds remain Book-Entry Bonds (i) the
provisions of this Section shall be in full force, (ii) to the extent that the
provisions of this Section conflict with any
<PAGE>
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provisions of this Indenture, the provisions of this Section shall control,
(iii) the Trustee shall deal with the Depository as representative of the Bond
Owners of the Book-Entry Bonds for purposes of exercising the rights of Holders
under this Indenture, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Bond Owners; (iv) the Issuer or the Trustee shall deliver
to the Depository any notice or other communication required to be delivered to
any Holder by the Issuer or the Trustee, respectively, and shall note thereon
the CUSIP number of the Bonds, (v) the Trustee is hereby authorized by the
Issuer to request from the Depository at any time at the expense of the Issuer,
a list of Depository Participants, (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and information furnished by the Depository
Participants with respect to Bond Owners, (vii) the Depository shall maintain
book entry records with respect to the Bond Owners and with respect to the
ownership and transfers of beneficial interests in the Bonds; (viii) ownership
and transfers of registration of the Bonds on the books of the Depository shall
be governed by applicable rules established by the Depository; (ix) the
Depository may collect its usual and customary fees, charges and expenses from
the Depository Participants, (x) any invitation to tender the Bonds shall be
made in compliance with the pertinent provisions of the DTC Letter Agreement,
(xi) to the extent required by the pertinent provisions of the DTC Letter
Agreement, the Issuer or, if applicable, the Trustee shall give the Depository
notice of any record date set by the Issuer or the Trustee (as the case may be)
pursuant to Section 13.03(e), (xii) to the extent of any conflict between the
DTC Letter Agreement and this Indenture, the provisions of the DTC Letter
Agreement shall control, (xiii) the rights of Bond Owners shall be exercised
only through the Depository and the Depository Participants and shall be limited
to those established by law and agreement between such Bond Owners, the
Depository and/or Depository Participants.
On or before the thirtieth (30th) day prior to any Issuer Redemption,
the Trustee shall notify the Depository of the date of such Issuer Redemption.
Bonds issued as Book-Entry Bonds shall be issued as Definitive Bonds in
the event that (A) the Issuer expressly advises the Trustee and the Bond Insurer
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as depository with respect to such Book-Entry
Bonds, and the Issuer is unable to locate a qualified successor, or (B) the
Issuer, in its sole discretion (but only with the express prior written consent
of the Trustee), elects to terminate the book-entry system through the
Depository by express written notice to the Depository, the Bond Insurer and the
Trustee, or (C) after the occurrence of an Event of Default, Bond Owners
representing not less than two-thirds in Aggregate Current Principal Amount of
such Book-Entry Bonds advise the Depository and the Bond Insurer through
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interest of the Bond Owners.
Upon the occurrence of any event described in the immediately preceding
sentence, the Depository shall be required to notify all Depository Participants
of the availability through the Depository of Definitive Bonds. Upon surrender
by the Depository of the certificate representing such Book-Entry Bonds and
instructions to the Trustee from the Depository for reregistration of the
Definitive Bond certificates and the Issuer's delivery to the Trustee of
appropriate Definitive Bond certificates, the Owner Trustee shall, on behalf of
the Issuer, execute
<PAGE>
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and the Trustee shall authenticate the entire principal amount of such
Book-Entry Bonds then Outstanding in Definitive Bonds and thereafter the Bond
Insurer and the Trustee shall recognize the Holders of such Definitive Bonds as
Holders under this Indenture. Neither the Issuer, the Bond Insurer, the Trustee
nor the Owner Trustee shall be liable for any delay in delivery of such
instructions and certificates and may conclusively rely on and shall be
protected in relying on such instructions.
<PAGE>
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ARTICLE III
PAYMENTS ON THE BONDS
SECTION 3.01 Collection Of Money.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Trustee pursuant to this Indenture,
shall hold all such money and property received by it as part of the Trust
Estate, and shall apply it as provided in this Indenture. If the Trustee shall
not have received a Servicer Remittance with respect to a Student Loan by the
second Business Day after the related Servicer Determination Date, the Trustee
shall request the Servicer to make such payment as promptly as practicable or
legally permitted, but in no event later than the Business Day preceding the
related Payment Date.
Except as otherwise expressly provided in this Indenture, if, following
any request by the Trustee for payment of a late Servicer Remittance, any
Default occurs in the making of such payment or if a Default occurs in any other
performance required under the Servicing Agreement of which the Trustee has
actual knowledge, the Trustee may, and upon the request of the Control Party
shall, take such action as may be specified in Section 6.03 herein to enforce
such payment or performance including the institution and prosecution of
appropriate Proceedings against the Servicer. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article VI.
SECTION 3.02 Payments Of Principal And Interest.
(a) Interest or principal payable on any Bond that is punctually paid
out of the Collateral Proceeds Account pursuant to Section 3.03 or duly provided
for by the Issuer on the applicable Payment Date or Redemption Date shall be
paid to the Person in whose name such Bond (or one or more Predecessor Bonds) is
registered at the close of business on the Record Date for such applicable
Payment Date or Redemption Date by payment to the Depository, which shall credit
the amount of such payments to the accounts of its Depository Participants in
accordance with its normal procedures, provided that in the event the Bonds are
no longer maintained as Book-Entry Bonds, payment shall be made by check mailed
to such Person's address as it appears in the Bond Register on such Record Date
or upon prior notice given to the Trustee, by wire transfer of immediately
available funds to the accounts specified by such Person, except for the final
payment of principal payable with respect to such Bond (or the Redemption Price)
for any Bond called for redemption, if such redemption will result in payment of
the then entire unpaid principal amount of such Bond), which shall be payable as
provided in subsection (b) of this Sec tion 3.02. Each Depository Participant
shall be responsible for disbursing such payments to the Bond Owners
<PAGE>
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of the Book-Entry Bonds that it represents and to each brokerage firm for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Bond Owners of the Book-Entry Bonds that it represents. All such credits
and disbursements are to be made by the Depository and the Depository
Participants in accordance with the provisions of the Bonds. Neither the Trustee
nor the Issuer shall have any responsibility therefor except as otherwise pro
vided by applicable law.
Any payment of interest or principal payable on any Bond which
otherwise would be due and payable on a day which is not a Business Day shall be
payable on the next succeeding Business Day and shall be deemed to have been
paid on such non-Business Day on which such payment was otherwise payable.
(b) All reductions in the principal amount of a Bond (or one or more
Predecessor Bonds) effected by payments of principal made on any Payment Date or
Redemption Date shall be binding upon all Holders of such Bonds and of any Bonds
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Bonds. The final
payment of principal of each Bond (including the Redemption Price of any Bond
called for redemption pursuant to Article XI) shall be payable only upon
presentation and surrender on or after the Payment Date or Redemption Date
therefor at the office or agency of the Issuer maintained by it for such purpose
pursuant to Section 9.01.
As soon as practicable prior to each Payment Date, the Trustee shall
determine whether, on the basis of Collateral Proceeds received and expected to
be received during the related Collection Period and withdrawn from the
Collateral Proceeds Account pursuant to Section 3.03(c), the entire remaining
unpaid principal amount of the Bonds will become due and payable on that Payment
Date or whether in accordance with Section 3.09(c), the Interest Reserve Amount
equals or exceeds the Aggregate Current Principal Amount of Outstanding Bonds,
and, if so, the Trustee shall, no later than five days prior to such Payment
Date, mail or cause to be mailed to the Issuer and to each Person in whose name
a Bond to be so retired is registered at the close of business on the Record
Date a notice to the effect that:
(i) it is expected that funds sufficient to pay such final
payment will be available in the Collateral Proceeds Account and the
Reserve Fund on such Payment Date, and
(ii) if such funds are available, (A) such final payment will
be payable on such Payment Date, but only upon presentation and
surrender of such Bond at the office or agency of the Issuer maintained
for such purpose pursuant to Section 9.01 (the address of which shall
be set forth in such notice), and (B) interest shall accrue on such
Bond up to and including the Business Day preceding such Payment Date.
Notices in connection with redemptions of Bonds shall contain the information
set forth in, and be mailed in accordance with, Section 11.03.
(c) Subject to the foregoing provisions of this Section 3.02, each Bond
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Bond shall represent the rights to unpaid principal
and interest that were represented by such other Bond.
<PAGE>
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Any checks mailed pursuant to subsection (a) of this Section 3.02 and returned
undelivered shall be held in accordance with Section 9.02.
(d) Notwithstanding any of the provisions of this Section with respect
to payments of principal of and interest on the Bonds, if the Bonds have become
or been declared due and payable in accordance with Section 3.09(c) or following
an Event of Default and such acceleration of maturity and its consequences have
not been rescinded and annulled, then payments of principal of and interest on
such Bonds shall be made in accordance with Section 6.07.
SECTION 3.03 Collateral Proceeds Account; Application Of Funds.
(a) On or before the Closing Date, the Trustee shall establish, at its
Corporate Trust Office, a segregated account that shall be the "Collateral
Proceeds Account" and shall be clearly labeled as such. The Trustee shall cause
the Servicer to directly deposit in the Collateral Proceeds Account all Servicer
Remittances with respect to the Student Loan Collateral, including any
liquidation proceeds related to Defaulted Student Loans. All remittances
deposited from time to time in the Collateral Proceeds Account, all other
deposits therein pursuant to this Indenture, all investments made with such
amounts, including all income or other gain from such investments, and all
amounts paid by the Bond Insurer to the Trustee pursuant to the Bond Insurance
Policy or pursuant to the Surety Bond, if any, shall be held by the Trustee in
the Collateral Proceeds Account, as part of the Trust Estate as herein provided,
subject to withdrawal by the Trustee for the purposes set forth in Subsections
(c) and (d) of this Section. The Issuer may, at any time and at its option,
deposit cash (or Eligible Investments maturing prior to the next Payment Date)
in the Collateral Proceeds Account for the purpose of avoiding any Event of
Default which would otherwise result pursuant to Section 6.01(1), but the Issuer
is under no obligation to do so. All funds withdrawn from the Collateral
Proceeds Account pursuant to Subsection (c) of this Section for the purpose of
making payments to the Holders of Bonds shall be so withdrawn in accordance with
Section 9.02.
(b) So long as no Default or Event of Default shall have occurred and
be continuing, all amounts in the Collateral Proceeds Account shall be invested
and reinvested by the Trustee in one or more Eligible Investments pursuant to an
Issuer Order. Such investments are subject to the following restrictions:
(i) except as permitted by clause (ii) below, no investment of
any amount held in the Collateral Proceeds Account may mature later
than the Business Day immediately preceding the next Payment Date; and
(ii) any investment (including repurchase agreements) in which
State Street Bank and Trust Company, in either its commercial or trust
capacity, is the obligor, may mature on a Payment Date if, under this
Section such investment could otherwise mature on the Business Day
immediately preceding such Payment Date.
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All income or other gains from investment of funds deposited in the
Collateral Proceeds Account shall be deposited by the Trustee in the Collateral
Proceeds Account immediately upon receipt, and any loss resulting from such
investment shall be charged to the Collateral Proceeds Account, and the Trustee
shall not be responsible in any way for such loss on any investment made
pursuant to this Indenture, except in its commercial capacity as obligor.
(c) Unless the Bonds have been declared due and payable pursuant to
Section 6.02 and funds collected by the Trustee are being applied in accordance
with Section 6.07, amounts in the Collateral Proceeds Account on any Payment
Date deposited during the Collection Period which ended during the calendar
month in which the Payment Date occurs shall be withdrawn from the Collateral
Proceeds Account, together with amounts on deposit in the Reserve Fund in excess
of the Interest Reserve Amount, in each case in the amounts required but not to
exceed the Available Payment Amount, for application on any Payment Date as
follows:
first, if such Payment Date is in September, commencing with
the Payment Date occurring on September 20, 1998, to the payment of (x)
the Guaranty Fee and the Surety Fee and (y) the Guaranty Fee Arrearage
and the Surety Fee Arrearage, if any, provided that no Insured Payments
shall be used for such payments;
second, to the Bonds for the payment of accrued interest at
the Bond Interest Rate;
third, if such Payment Date is the Stated Maturity, to the
Bonds for the payment of any unpaid principal amount of the Bonds;
fourth, to the payment of Reimbursement Amounts then due and
owing under the Reimbursement Agreement (as same is certified to the
Trustee by the Bond Insurer); provided that no Insured Payments shall
be used for such payments;
fifth, to the payment to the Reserve Fund of any shortfall in
the Interest Reserve Amount for the Interest Accrual Period commencing
on such Payment Date; provided, that no Insured Payments under the Bond
Insurance Policy shall be used for such payments; provided further
that, if after giving effect to all payments of interest and principal
on the Bonds on such Payment Date, the Interest Reserve Amount equals
or exceeds the Aggregate Current Principal Amount of Outstanding Bonds,
then the Trustee shall declare all the Bonds to be immediately due and
payable pursuant to Section 3.09(c);
sixth, to the payment of scheduled fees due the Trustee
pursuant to Section 7.07; provided, that no Insured Payments under the
Bond Insurance Policy shall be used for such payments;
seventh, to the payment of any unpaid fees due any Accountants
for services rendered pursuant to Section 9.12 hereof or otherwise
under this Indenture; provided, that no Insured Payments under the Bond
Insurance Policy shall be used for such payments;
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eighth, to the payment of any scheduled fees due the Owner
Trustee pursuant to the Trust agreement; provided, that no Insured
Payments under the Bond Insurance Policy shall be used for such
payments;
ninth, to the payment of any scheduled fees due to the
Administrator pursuant to the Administration Agreement;
tenth, to the Owner Trustee, for the benefit of the Funding
Owners, the amount of any Funding Owner Payments which are designated
liquidity capital contributions under the Trust Agreement which have
previously been deposited into the Reserve Fund pursuant to Section
3.11 hereof and which have not been repaid to the Owner Trustee for the
benefit of the Funding Owners; provided, that no Insured Payments under
the Bond Insurance Policy shall be used for such payments;
eleventh, on each Principal Payment Date that is not the
Stated Maturity, to the Bonds for the payment of any unpaid principal
amount of the Bonds;
twelfth, to the payment of any unpaid amount due the Trustee
pursuant to Section 7.07;
thirteenth, to the payment of any unpaid amount due the Owner
Trustee pursuant to the Trust agreement;
fourteenth, to the payment of any unpaid amount due the
Administrator pursuant to the Administration Agreement;
fifteenth, if such Payment Date is not a Principal Payment
Date, any remaining amounts in the Collateral Proceeds Account shall be
deposited in the Reserve Fund;
each such amount in paragraphs second and eleventh above being the amount
thereof set forth in the Payment Date Statement or in the notice from the Issuer
given pursuant to Section 11.02; provided, that, Insured Payments under the Bond
Insurance Policy will only be applied to the payment of interest on the Bonds on
any Payment Date and principal on the Bonds on the Stated Maturity; provided,
further, that prior to the first Principal Payment Date, twelfth, thirteenth and
fourteenth above will only be paid upon the Bond Insurer's consent, which
consent will not unreasonably be withheld.
SECTION 3.04 General Provisions Regarding Pledged
Accounts Or Funds.
(a) Each Pledged Account or Fund shall relate solely to the Bonds and
to the Student Loans and other property securing the Bonds. Funds and other
property in each Pledged Account or Fund shall be at all times separately
accountable on the internal books and records of the Trustee. Funds and other
property in each Pledged Account or Fund shall not be commingled with any other
funds or property of the Issuer or any Affiliate thereof. Notwithstanding the
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foregoing, the Trustee may hold any funds or other property received or held by
it as part of a Pledged Account or Fund in collective accounts maintained by it
in the normal course of its business and containing funds or property held by it
for other Persons (which may include the Issuer or an Affiliate), provided that
such accounts are under the sole control of the Trustee and the Trustee
maintains adequate records indicating the ownership of all such funds or
property and the portions thereof held for credit to each Pledged Account or
Fund.
(b) The Issuer agrees not to direct the Trustee to make any investment
of any funds in a Pledged Account or Fund or to sell any investment held in a
Pledged Account or Fund except
under the following terms and conditions:
(i) each such investment shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the
Trustee (or, if, as indicated by an Opinion of Counsel delivered to the
Trustee, applicable law provides for perfection of security interests
of an investment not evidenced by a certificate or other instrument
through a recordation of such security interests on books maintained by
or on behalf of the issuer of such investment, such security interests
may be so recorded);
(ii) the Trustee shall have sole control over such investment,
the income thereon and the proceeds thereof;
(iii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Trustee or its agent; and
(iv) the proceeds of each sale of such an investment shall be
remitted by the purchaser thereof directly to the Trustee for deposit
in the Pledged Account or Fund in which such investment was held.
(c) If any amounts are needed for disbursement from a Pledged Account
or Fund and sufficient uninvested funds are not available therein to make such
disbursement, in the absence of an Issuer Order for the liquidation of
investments held therein in an amount sufficient to provide the required funds,
the Trustee shall cause to be sold or otherwise converted to cash a sufficient
amount of the investments in such Pledged Account or Fund.
(d) The Trustee shall not in any way be held liable by reason of any
insufficiency in any Pledged Account or Fund except for losses on investments
that are liabilities of State Street Bank and Trust Company in its commercial
capacity as obligor under the terms of this Indenture.
(e) All investments of funds in a Pledged Account or Fund and all sales
of investments held in a Pledged Account or Fund shall, except as provided
below, be made by the Trustee in accordance with an Issuer Order. Subject to
compliance with the requirements of Section 3.03(b), such Issuer Order may
authorize the Trustee to make the specific investments set forth therein, to
make investments from time to time consistent with the general instructions set
forth therein, or to make specific investments pursuant to written or telecopied
instructions of the employees or
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agents of the Issuer identified therein, in each case in such amounts as such
Issuer Order shall specify.
In the event that:
(i) the Issuer shall have failed to give written investment
directions to the Trustee by 10:00 A.M. New York City time on any
Business Day authorizing the Trustee to invest
the funds then in a Pledged Account or Fund;
(ii) a Default or Event of Default shall have occurred and be
continuing but the Bonds shall not have been declared due and payable
pursuant to Section 6.02, or if the Bonds shall have been declared due
and payable following an Event of Default, amounts collected or
receivable from the Trust Estate are being applied in accordance with
Section 6.04; or
(iii) an Event of Default shall have occurred and be
continuing, the Bonds shall have been declared due and payable pursuant
to Section 6.02, and amounts collected or re ceivable from the Trust
Estate are being applied in accordance with Section 6.07;
the Trustee shall invest and reinvest the funds then in each related Pledged
Account or Fund to the fullest extent practicable, in such manner as the Trustee
shall from time to time determine, but only in the investment under clause (v)
in the definition of Eligible Investment. If no such investment vehicle is
available, the funds shall remain uninvested. All investments made pursuant to
clause (i) above shall mature on the next Business Day following the date of
such investment and all such investments made pursuant to Clause (ii) above
shall mature no later than the maturity date therefor permitted by Section
3.03(b) or 3.09(d) and all investments made pursuant to clause (iii) above shall
mature no later than the first date following the date of such investment on
which the Trustee proposes to make a distribution to Holders of Bonds.
SECTION 3.05 Reports By Trustee To Bondholders.
The Trustee shall prepare and deliver to the Issuer, the Bond Insurer,
each Rating Agency and each Bondholder not later than one (1) Business Day
following each Payment Date, a statement (a "Payment Date Statement") with
respect to such Payment Date setting forth the
following information:
(a) the Available Payment Amount on deposit in the Collateral
Proceeds Account and the Reserve Fund, itemizing (i) Servicer
Remittances received during the related Collection Period, (ii) net
liquidation proceeds related to Defaulted Student Loans received during
the related Collection Period, (iii) the aggregate amount of
reinvestment income received during the Collection Period, (iv) Funding
Owner Payments received by the Trustee during the related Interest
Accrual Period, designating whether such payments are mandatory capital
contributions or liquidity capital contributions and the Funding Owners
who have made such contributions and (v) amounts on deposit in the
Reserve Fund in
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excess of the Interest Reserve Amount, (vi) any Insured Payments and (vii) any
indemnification, repurchase or other similar proceeds received by the Trustee
during the related Interest Accrual Period related to the Student Loans;
(b) the aggregate amount of interest accrued during the
immediately preceding Interest Accrual Period on all Outstanding Bonds;
(c) the aggregate amount of all payments then being made with
respect to the Bonds;
(d) the aggregate amount of all payments then being made with
respect to the Bonds which represents principal;
(e) the amount of any payment then being made with respect to
an Individual Bond;
(f) the amount of the payment then being made with respect to
an Individual Bond which represents interest;
(g) the amount of the payment then being made with respect to
an Individual Bond which represents principal;
(h) the Current Principal Amount of an Individual Bond after
giving effect to any
repayment of principal made on such date;
(i) the Aggregate Stated Principal Balance of all Student
Loans still subject to the lien of this Indenture;
(j) the Aggregate Current Principal Amount of Bonds after
giving effect to the principal payments to be made on such Payment
Date; and
(k) the aggregate amount of Defaulted Student Loans, if any,
as of the related Payment Date;
provided, the Issuer shall cause the Servicer to certify in writing to the Bond
Insurer and the Trustee the information in (a)(ii) and (vii), (i) and (k) above
for the purpose of preparing such Payment Date Statement; and the Issuer shall
certify in writing to the Bond Insurer and the Trustee
the information in (a)(iv).
The Trustee shall be entitled to rely conclusively on any such
information provided by the Servicer to the Issuer.
In addition, the Issuer, to the extent required by applicable law,
shall prepare and file any and all tax returns, information statements or other
filings required to be delivered to any governmental taxing authority and to
Bondholders pursuant to any applicable law with respect to
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the Trust Estate and the transactions contemplated hereby. The Trustee shall, to
the extent re quired by applicable law, execute the foregoing documents upon the
Issuer's request and return such documents to the Issuer.
SECTION 3.06 Pledged Accounts Reports By Trustee.
The Trustee shall prepare and deliver to the Issuer and the Bond
Insurer not later than the tenth (10th) Business Day after the end of each
calendar quarter, a report, with respect to each Pledged Account securing the
Bonds, setting forth the following information:
(1) the balance in each Pledged Account at the beginning and end of
such calendar quarter;
(2) the cash and Eligible Investments held in each Pledged Account at
the end of such calendar quarter; and
(3) the aggregate amount of reinvestment income with respect to each
Pledged Account received during such calendar quarter.
SECTION 3.07 Collections Of The Student Loans.
In order to facilitate the servicing of the Student Loans by the
Servicer of such Student Loans, the Servicing Agreement provides that the
Servicer shall retain, in accordance with the provisions of the Servicing
Agreement and this Indenture, all collections on such Student Loans prior to the
time they are deposited into the Collateral Proceeds Account or the Reserve
Fund. The Trustee hereby designates the Servicer as its agent and bailee to hold
such collections on such Student Loans until they are deposited into the
Collateral Proceeds Account or the Reserve Fund. By the designation pursuant to
this Section and the acceptance of such designation by the Servicer of a Student
Loan pursuant to the Servicing Agreement, the Trustee, as secured party, has
possession of all collections on the Student Loans for purposes of Section 9-305
of the Uniform Commercial Code as in effect in Massachusetts, Pennsylvania,
Delaware and New York for the benefit of the Bondholders and the Bond Insurers.
SECTION 3.08 Amendments To Servicing Agreement.
The Trustee may, without the consent of any Bondholder, enter into or
consent to any amendment or supplement to the Servicing Agreement (including
without limitation any amendment providing for the appointment of a successor
Servicer) with the consent of the Bond Insurer provided such amendment or
supplement cannot reasonably be expected to adversely affect the Bondholders or
the Bond Insurer (in the Bond Insurer's sole judgment). Such a consent shall not
adversely affect the Holders of the Bonds if there is delivered to the Bond
Insurer and the Trustee written notification from each Rating Agency (which
shall be obtained by the Trustee prior to any such amendment providing for the
appointment of a successor Servicer) to the effect that such amendment or
supplement will not result in any change in the current rating assigned by such
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Rating Agency. The Trustee may, in its discretion, decline to enter into or
consent to any such supplement or amendment if its own rights, duties or
immunities shall be adversely affected.
SECTION 3.09 Reserve Fund.
(a) The Trustee shall establish and maintain the Reserve Fund into
which the Trustee shall make such deposits, and from which the Trustee shall
make such withdrawals, as herein specified in this Section 3.09 and Section
3.11. The Reserve Fund shall be maintained at the Corporate Trust Office as a
segregated account clearly labeled as such. All funds deposited from time to
time in the Reserve Fund pursuant to this Indenture shall be held by the Trustee
as part of the Trust Estate on behalf of the Bond Insurer, the Bondholders and
the Trustee as provided herein.
(b) On the Closing Date, the Issuer shall deliver to the Trustee and
the Trustee shall deposit $1,080,000 in the Reserve Fund and acquire, pursuant
to an Issuer Order, Eligible Investments; provided such Issuer Order shall
specify the Eligible Investments to be acquired; provided further, that the
Issuer shall, from time to time, by Issuer Order, direct the Trustee as to which
new Eligible Investment should be disposed of or newly acquired. Notwithstanding
anything set forth in Section 3.04 to the contrary, the Trustee shall deposit in
the Reserve Fund (pursuant to Issuer Order) the proceeds from the earnings on
any sale of Eligible Investments.
On each Payment Date, an amount equal to any shortfall in the Interest
Reserve Amount for the Interest Accrual Period commencing on such Payment Date
shall be deposited in the Reserve Fund from funds in the Collateral Proceeds
Account, pursuant to Section 3.03(c) or from Funding Owner Payments, pursuant to
Section 3.11 or from payments made under the Surety Bond, pursuant to Section
3.13 hereof.
(c) On any Payment Date, if the amount in the Collateral Proceeds
Account is not sufficient to pay interest due and unpaid on the Bonds, the
Trustee shall withdraw (to the amount of available funds) from the Reserve Fund
and deposit in the Collateral Proceeds Account an amount equal to the amount of
such shortfall; provided that, if after giving effect to all payments of
interest of and principal on the Bonds on such Payment Date, the Interest
Reserve Amount equals or exceeds the Aggregate Current Principal Amount of
Outstanding Bonds, then the Trustee shall declare all the Bonds to be
immediately due and payable by a notice in writing to the Issuer and to all
Bondholders pursuant to Section 3.02(b).
(d) After September 20, 2001, so long as no Default or Event of Default
shall have occurred and be continuing, all amounts in the Reserve Fund shall be
invested and reinvested by the Trustee in one or more Eligible Investments
pursuant to an Issuer Order. Such investments
are subject to the following restrictions:
(i) except as permitted by clause (ii) below, no investment of
any amount held in the Reserve Fund may mature later than the Business
Day immediately preceding the next Payment Date; and
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(ii) any investment (including repurchase agreements) in which
State Street Bank and Trust Company, in either its commercial or trust
capacity, is the obligor, may mature on a Payment Date if, under
Section 3.03 such investment could otherwise mature on the Business Day
immediately preceding such Payment Date.
All income or other gains from investment of funds deposited in the
Reserve Fund shall be deposited by the Trustee in the Reserve Fund immediately
upon receipt, and any loss resulting from such investment shall be charged to
the Reserve Fund, and the Trustee shall not be responsible in any way for such
loss on any investment made pursuant to this Indenture.
SECTION 3.10 Cost Of Issuance Account.
(a) The Trustee shall establish and maintain the Cost of Issuance
Account into which the Trustee shall make such deposits, and from which the
Trustee shall make such withdrawals, as herein specified. The Cost of Issuance
Account shall be maintained at the Corporate Trust Office as a segregated
account clearly labeled as such.
(b) On the Closing Date, the Cost of Issuance Amount shall be deposited
in the Cost of Issuance Account from the proceeds of the sale of the Bonds.
(c) Promptly after the Closing Date, amounts in the Cost of Issuance
Account shall be withdrawn and used by the Trustee in accordance with this
Section 3.10 for the purpose of paying Costs of Issuance. Costs of Issuance
shall be paid by the Trustee upon receipt of an Issuer Order, which shall direct
the payment to designated payees in designated amounts for stated services and
certify that such payment is a proper charge against the Cost of Issuance
Account therein and is then due and owing for services rendered or expenses
incurred. Any amounts remaining therein upon payment of all Costs of Issuance
shall be deposited in the Reserve Fund upon receipt by the Trustee of an
Officers' Certificate of the Issuer stating that such moneys are no longer
needed for the payment of Costs of Issuance.
SECTION 3.11 Funding Owner Payments.
The Trustee shall promptly deposit all Funding Owner Payments received
from the Owner Trustee pursuant to the Trust Agreement from time to time into
the Reserve Fund. Funding Owner Payments shall be accompanied by an Issuer Order
identifying such payments as liquidity capital contributions or mandatory
capital contributions and the Funding Owners who have made such contribution.
SECTION 3.12 Insured Payments Under The Bond Insurance Policy.
(a) No later than 12:00 noon New York City time on each Servicer
Determination Date immediately preceding each Payment Date (or as soon
thereafter as practical), the Trustee shall determine whether a Deficiency
Amount exists. Such determination shall be made based on the information stated
in the Servicer Remittance Report most recently received,
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and after giving effect to the amounts then on deposit in, and transfers from,
the Collateral Proceeds Account, the Reserve Fund and any Funding Owner Payments
to be made on such Servicer Determination Date (as set forth in an Issuer
Request). If a Deficiency Amount exists, the Trustee shall deliver to the Bond
Insurer a completed Notice of Non-Payment by telephone or telecopy confirmed in
writing by registered or certified mail specifying any such Deficiency Amount no
later than the third Business Day prior to the related Payment Date. Any
proceeds of any such claim for a Deficiency Amount received by the Trustee from
the Bond Insurer shall be deposited in the Collateral Proceeds Account for
payment of principal and interest solely to the Bondholders. The Trustee
recognizes that such payment by the Bond Insurer does not cure the Event of
Default resulting from the failure of the Issuer to pay interest or principal
nor relieve the Issuer of any obligation.
(b) On any day that the Trustee has actual knowledge or receives notice
of a Preference Amount, the Trustee shall make a claim within three Business
Days thereafter upon the Bond Insurance Policy for the full amount of such
Preference Amount in accordance with the terms of the Bond Insurance Policy. Any
proceeds of any such Preference Amount received by the Trustee shall be
deposited in the Collateral Proceeds Account solely for payment to the
Bondholders.
(c) Unless a Bond Insurer Default exists, the Bond Insurer shall, at
all times that any Bonds are Outstanding or any Reimbursement Amounts are owing
to the Bond Insurer, be treated as if it were the exclusive owner of all Bonds
for the purposes of all approvals, consents, waivers (except for any approval,
consent or waiver for which the consent of each affected Bondholder is required
pursuant to Section 10.02 hereof), the institution of any action and the
direction of all remedies, and the Trustee shall take the direction of the Bond
Insurer when exercising remedies with respect to the Bonds, if indemnified by
the Bond Insurer to its reasonable satisfaction.
(d) Payments with respect to claims for interest on and principal of
the Bonds disbursed by the Paying Agent from proceeds of the Bond Insurance
Policy shall not be considered to discharge the obligation of the Issuer with
respect to such Bonds, and the Bond Insurer shall become the owner of such
unpaid Bonds and claims for the interest and principal thereon. The Trustee
shall deliver to the Bond Insurer, uncancelled, all Bonds (or portions thereof)
surrendered to it for payment and with respect to which the Bond Insurer has
made payment as provided in the Bond Insurance Policy. Such Bonds shall be
delivered as fully registered Bonds, per instructions of the Bond Insurer.
(e) The Issuer and the Trustee hereby agree for the benefit of the Bond
Insurer that:
(i) They recognize that to the extent the Bond Insurer makes
payments, directly or indirectly (as by paying through the Paying
Agent), on account of principal of, or interest on, the Bonds, the Bond
Insurer will be subrogated to the rights of the Holders of such Bonds
to receive the amount of such principal and
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interest from the Issuer, with interest thereon at the Late Payment
Rate (as defined in the Reimbursement Agreement and certified to the
Trustee by the Bond Insurer) and solely from the Trust Estate securing
the Bonds, except as provided in the Reimbursement Agreement; and
(ii) They will accordingly pay to the Bond Insurer the amount
of such principal and interest, which principal and interest shall be
deemed past due and not to have been paid, with interest thereon as
provided in this Indenture, the Bonds and the Reimbursement Agreement,
but only from the sources and in the manner provided by this Indenture,
the Reimbursement Agreement and the Bonds for the payment of principal
of and interest on the Bonds to Holders, and will otherwise treat the
Bond Insurer as the owner of such rights to the extent of such
principal and interest.
(f) In the event that the Bond Insurer shall make any payments of
principal of, and/or interest on, any of the Bonds pursuant to the terms of the
Bond Insurance Policy, and the Bonds are accelerated pursuant to Section 6.02,
the Bond Insurer at any time and at its sole option, may pay to the registered
owners of the Bonds all or any portion of amounts due under the Bonds prior to
the Stated Maturity Date thereof. Neither the Holders of the Bonds, the Trustee
nor the Issuer shall have the right to require the Bond Insurer to pay on such
accelerated basis.
(g) The Paying Agent is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for Holders of the Bonds (and
by acceptance of their Bonds the Bondholders agree to such designation,
appointment, direction and authorization) as follows:
(i) If and to the extent there is a Deficiency Amount in
amounts required to pay interest on the Bonds, the Paying Agent shall
(a) execute and deliver to Bond Insurer's Fiscal Agent, in form
satisfactory to the Bond Insurer's Fiscal Agent, an instrument
appointing the Bond Insurer as agent for such Holders in any legal
proceeding related to the payment of such interest and an assignment to
the Bond Insurer of the claims for interest to which such Deficiency
Amount relates and which are paid by the Bond Insurer, (b) receive as
designee of the respective Holders (and not as Paying Agent) in
accordance with the tenor of the Bond Insurance Policy payment from the
Bond Insurer's Fiscal Agent with respect to the claims for interest so
assigned, and (c) disburse the same to such respective Holders; and
(ii) If and to the extent of a Deficiency Amount in amounts
required to pay principal of the Bonds, the Paying Agent shall (a)
execute and deliver to the Bond Insurer's Fiscal Agent in form
satisfactory to the Bond Insurer's Fiscal Agent an instrument
appointing the Bond Insurer as agent for such Holder in any legal
proceeding relating to the payment of such principal and an assignment
to the Bond Insurer of any of the Bonds surrendered to the Bond
Insurer's Fiscal Agent of so much of the principal amount thereof as
has not previously been paid or for which moneys are not held by the
Paying Agent and available for such payment (but such assignment shall
be delivered only if payment from the
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Bond Insurer's Fiscal Agent is received), (b) receive as designee of
the respective Holders (and not as Paying Agent) in accordance with the
tenor of the Bond Insurance Policy payment therefor from the Bond
Insurer's Fiscal Agent, and (c) disburse the same to such Holders.
SECTION 3.13 Insured Payments Under The Surety Bond.
(a) No later than 12:00 noon New York City time on each Servicer
Determination Date immediately preceding each Payment Date (or as soon
thereafter as practical), the Trustee shall determine whether a Deficiency
Amount exists with respect to a Funding Owner Payment. Such determination shall
be made after giving effect to the amounts then on deposit in, and transfers
from, the Collateral Proceeds Account, the Reserve Fund and any Funding Owner
Payments to be made on such Servicer Determination Date. If a Deficiency Amount
exists, the Trustee shall deliver to the Bond Insurer a completed Demand for
Payment by telephone or telecopy confirmed in writing by registered or certified
mail specifying any such Deficiency Amount no later than the third Business Day
prior to the related Payment Date. Any proceeds of any such claim for a
Deficiency Amount received by the Trustee from the Bond Insurer shall be
deposited in the Collateral Proceeds Account on behalf of the Bond Holders in
the amount of the Funding Owner Payment.
(b) Payments with respect to claims for Funding Owner Payments
disbursed by the Bond Insurer's Fiscal Agent from proceeds of the Surety Bond
shall not be considered to discharge the obligation of the applicable Funding
Owner with respect to such Funding Owner Payments.
(c) The Issuer and the Trustee hereby agree for the benefit of the Bond
Insurer that:
(i) They recognize that to the extent the Bond Insurer makes
payments, directly or indirectly (as by paying through the Paying
Agent), on account of Funding Owner Payments, the Bond Insurer will be
subrogated to the rights of the Issuer to receive the amount of such
Funding Owner Payments, with interest thereon at the Late Payment Rate
(as defined in the Reimbursement Agreement and certified to the Trustee
by the Bond Insurer), except as otherwise provided in the Reimbursement
Agreement; and
(ii) They will (to the extent received from the applicable
Funding Owner) accordingly pay to the Bond Insurer the amount of such
Funding Owner Payments, which Funding Owner Payments shall be deemed
past due and not to have been paid, with interest thereon as provided
in the Reimbursement Agreement, but only from the sources and in the
manner provided by this Indenture and the Bonds for the payment of
Funding Owner Payments, except as otherwise provided in the
Reimbursement Agreement and will otherwise treat the Bond
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Insurer as the owner of such rights to the extent of such unpaid
Funding Owner Payments.
ARTICLE IV
SECURITY FOR THE BONDS
SECTION 4.01 Grant Of Trust Estate.
To secure the payment of Outstanding Obligations, the payment of all
other sums payable hereunder and the performance of all of the Issuer's
covenants and agreements in this
Indenture,
the Issuer HEREBY Grants to the Trustee without recourse, in trust and as
collateral security, for the exclusive benefit of the Bond Insurer and Holders
of the Bonds (and the Trustee, to the extent provided herein) as their interests
appear herein a security interest in and to the following (collectively, the
"Trust Estate" or the "Collateral"):
(a) all of the Issuer's right, title and interest in and to, and all
benefits accruing from, the Student Loans identified on Schedule I hereto, and
all payments made thereon, together with the related Loan Documents;
(b) the Collateral Proceeds Account (including all income from
investment of funds therein);
(c) the Reserve Fund (including all income from investment of funds
therein);
(d) the Issuer's rights under the Servicing Agreement;
(e) the Issuer's rights under any Origination Agreement;
(f) the Issuer's rights under the Administration Agreement;
(g) the Issuer's rights to require Funding Owner Payments under the
Trust Agreement;
(h) the Issuer's rights under any other agreements in connection
herewith; and
(i) all proceeds of each of the foregoing items of Collateral
(including without limitation, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations or receivables
that at any time constitute any or all of the proceeds of the foregoing).
The Trustee acknowledges such Grant without notice of any prior or
competing interest in the Collateral, and the Trustee further accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties required by this Indenture.
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SECTION 4.02 Documents Delivered To Trustee.
To effect the Grant of the Student Loans constituting a portion of the
Trust Estate, the Issuer has delivered and released to the Servicer pursuant to
the Custodial Agreement, as agent for Trustee, the original Loan Documents as
required by the Custodial Agreement for each Student
Loan comprising the Student Loan Collateral.
The Servicer shall certify its receipt to the Trustee and the Issuer of
all such Loan Documents required to be delivered pursuant to the Custodial
Agreement, as evidenced by the trust receipt of the Custodian in the form
annexed to the Custodial Agreement.
SECTION 4.03 Acceptance By Trustee.
The Trustee acknowledges receipt of the documents described in Section
4.02 hereof by the Servicer, on behalf of the Trustee, and declares that the
Servicer holds and will hold the Collateral on behalf of the Bond Insurer and
the Trustee in trust, upon the trusts set forth herein, for the use and benefit
of the Bond Insurer and all present and future Holders of Bonds as provided in
this Indenture.
SECTION 4.04 Limited Withdrawal And Substitution Of Collateral.
During the 60 day period following the Closing Date, the Issuer, at its
option, upon Issuer Order delivered to the Trustee (with a copy to the Bond
Insurer), may withdraw Student Loans having an aggregate original Stated
Principal Balance up to five percent (5%) of the aggregate Stated Principal
Balance of the Student Loans identified on Schedule I hereto, subject to the
satisfaction of clause (A) below.
(A) Student Loans shall be released from the lien of this
Indenture, if the Issuer:
(1) deposits with the Trustee, on or before the date of
withdrawal, cash, together with an Issuer Order
directing the Trustee to deposit such cash in the
Collateral Proceeds Account, and/or additional
Student Loans having the same terms, including Note
Rates, as the Student Loans being withdrawn, and
(2) certifies to the Trustee and the Bond Insurer that
either:
(a) the aggregate Stated Principal Balance and
accrued interest of the Student Loans being
deposited is at least equal to the aggregate
Stated Principal Balance and accrued
interest of the Student Loans being
withdrawn or
(b) to the extent that cash is substituted in
whole or in part for such Student Loans, the
amount of cash being deposited is at least
equal
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to the aggregate Stated Principal Balance of
the Student Loans being withdrawn minus
(i) the aggregate Stated Principal
Balance of the Student Loans being
deposited, if any (such difference,
the "Net Loans Withdrawn"),
(ii) the amount derived by dividing the
excess of the aggregate Stated
Principal Balance of the Student
Loans at the Closing Date over the
Aggregate Current Principal Amount
of the Bonds by the Aggregate
Current Principal Amount of the
Bonds, multiplied by the Net Loans
Withdrawn; and
(iii) the amount derived by dividing the
Net Loans Withdrawn by the aggregate
Stated Principal Balance of the
Student Loans in the Trust Estate
prior to any withdrawal being made
therefrom, multiplied by the then
current balance of the Reserve Fund;
(B) Notwithstanding Subclause (A), no withdrawal or substitution
of Student Loans pursuant to this Section 4.04 having an
aggregate Stated Principal Balance in excess of one percent
(1%) of the aggregate Stated Principal Balance of the Student
Loans identified on Schedule I hereto shall be permitted until
each Rating Agency shall have confirmed in writing that such
withdrawal or substitution will not result in a reduction in
or withdrawal of the then current rating of the Bonds and the
Bond Insurer shall have consented thereto.
(C) Prior to any withdrawal or substitution of Collateral pursuant
to this Section 4.04, the Issuer shall provide an Opinion of
Counsel that complies with TIA ss.314(d)(1), if required.
SECTION 4.05 Release Of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
7.07 and upon receipt of an Issuer Order directing the Trustee to do so, the
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, or
convey the Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture, including
Sections 4.04, 5.03 and 6.16 hereof. No party relying upon an instrument
executed by the Trustee as provided in this Article IV shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or supervise the application of any funds.
(b) The Trustee shall, at such time as there are no Bonds Outstanding
and all amounts due the Bond Insurer and the Trustee pursuant to Section 7.07
have been paid, release any
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remaining portion of the Trust Estate that secured the Bonds from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Collateral Proceeds Account and the Reserve
Fund. The Trustee shall release property from the lien of this Indenture
pursuant to this Section 4.05(b) only upon receipt of an Issuer Request
accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and
an Independent certificate in accordance with TIA ss.ss. 314(c) and 314(d)(1).
SECTION 4.06 Opinion Of Counsel.
The Bond Insurer and the Trustee shall receive at least seven days'
notice when requested by the Issuer (or the Servicer pursuant to Section
5.03(b)) to take any action pursuant to Section 4.05(a), accompanied by copies
of any instruments involved, and the Bond Insurer and the Trustee shall also
require (except for releases under Section 5.03(b)), as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the Bond
Insurer and the Trustee, stating the legal effect of any such action, outlining
the steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Bonds or the
rights of the Bond Insurer or the Bondholders in contravention of the provisions
of this Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
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ARTICLE V
SATISFACTION AND DISCHARGE
SECTION 5.01 Satisfaction And Discharge Of Indenture.
Whenever the following conditions shall have been satisfied:
(1) either:
(A) all Bonds theretofore authenticated and delivered (other
than (i) Bonds that have been destroyed, lost, stolen or mutilated and
surrendered to the Trustee and that have been replaced or paid as
provided in Section 2.06, and (ii) Bonds for whose payment money has
theretofore been deposited in trust thereafter repaid to the Issuer, as
provided in Section 9.02) have been delivered to the Trustee for
cancellation; or
(B) all Bonds not theretofore delivered to the Trustee for
cancellation:
(i) have become due and payable; or
(ii) will become due and payable at the Stated Maturity within
one year; or
(iii) are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of
the Issuer;
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee, in trust for such
purpose, an amount sufficient to pay and discharge the entire
indebtedness on such Bonds not theretofore delivered to the Trustee for
cancellation, for principal and interest through and including the
Business Day preceding such applicable Payment Date, the date of
acceleration if the Bonds shall have been declared immediately due and
payable, or the Business Day preceding the date of the Stated Maturity;
(2) the Issuer has paid or caused to be paid amounts owing to
the Bond Insurer and all other amounts payable hereunder by the Issuer;
and
(3) the Issuer has delivered to the Bond Insurer and the
Trustee an Officers' Certificate of the Issuer, and an Opinion of
Counsel each stating that all conditions precedent herein providing for
the satisfaction and discharge of this Indenture have been complied
with, together with an Independent certificate in accordance with TIA
ss. 3.14(c) and ss. 3.14(d)(i);
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then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby shall cease to be of further effect, and the Trustee and each
co-trustee and separate trustee, if any, then acting as such hereunder shall, at
the expense of the Issuer, execute and deliver all such instruments as may be
necessary to acknowledge the satisfaction and discharge of this
Indenture,
including, but not limited to, those instruments required to be executed
pursuant to Section 4.05 hereof, and shall pay, or assign or transfer and
deliver, to the Issuer or, upon Issuer Order, its assignee, all cash, securities
and other property held by it as part of the Trust Estate remaining af ter
satisfaction of the conditions set forth in clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 7.07, the obligations of
the Trustee to the Issuer and to the Holders of Bonds under Section 9.02, the
obligations of the Trustee to the Holders of Bonds under Section 5.02, the
rights, privileges and immunities of the Trustee pursuant to Article VII and the
provisions of Article II with respect to lost, stolen, destroyed or mutilated
Bonds, registration or transfers of Bonds, and rights to receive payments of
principal of and interest on the Bonds shall survive.
SECTION 5.02 Application Of Trust Money.
All money deposited with the Trustee pursuant to Sections 5.01 and 9.02
shall be held in trust and applied by it, in accordance with the provisions of
the Bonds and this Indenture, to the payment of the principal and interest,
either directly or through any Paying Agent, as the Trustee may determine, to
the Persons entitled thereto, for whose payment such money has been deposited
with the Trustee.
SECTION 5.03 Trustee's Authority; Release Of Prepaid Student Loans.
(a) No party relying upon an instrument executed by the Trustee as
provided in this Article shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any funds.
(b) Upon the request of the Servicer accompanied by an Officer's
Certificate and such documents as required by the Servicing Agreement, as
certified to the Trustee and the Bond Insurer in such Officer's Certificate, to
the effect that a Student Loan has been the subject of a Full Prepayment so as
to become a prepaid Student Loan and certifying that the unpaid principal
balance of and accrued interest at the Note Rate on such Student Loan has been
deposited or remitted in accordance with the Servicing Agreement, the Trustee
shall release from the lien of this Indenture such Student Loan including the
related Loan Documents to the Servicer or its designees or assigns in accordance
with the instructions of the Servicer.
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ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Event Of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) if the Issuer shall:
(A) default in the payment of principal of any Bond at Stated
Maturity;
(B) default in the payment of interest on any Bond and such
Default or failure shall continue for a period of one Business Day; or
(C) default in the payment of the Redemption Price of any Bond
that has been called for redemption pursuant to Article XI, and such
Default or failure shall continue for a period of five days;
(2) if the Issuer shall breach or default in the due
observance or performance of, any covenant or warranty of the Issuer in
this Indenture (other than a covenant or warranty of the Issuer that is
specifically addressed elsewhere in this Section or in Article IX), and
such Default shall continue for a period of 30 days after there shall
have been given, by first class mail or overnight courier service, to
the Issuer by the Trustee or to the Issuer and the Trustee by the Bond
Insurer, or if a Bond Insurer Default has occurred, by the Holders of
the Bonds, representing at least 25% of the Aggregate Current Principal
Amount of the Outstanding Bonds, a written notice specifying such
Default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(3) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Issuer a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Issuer under the Federal Bankruptcy Code or any other applicable
federal or state law, or appointing a receiver, liquidator, assignee,
or sequestrator (or other similar official) of the Issuer or of any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer and the continuance of any
such decree or order unstayed and in effect for a period of 90
consecutive days;
(4) the commencement by the Issuer of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency
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proceedings against it, or the filing by it of a petition or answer or
consent seeking reorganization or similar relief under the Federal
Bankruptcy Code or any other similar applicable federal or state law,
or the consent by the Issuer to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, or
sequestrator (or other similar official) of the Issuer or of any
substantial part of its property, or the making by the Issuer of an
assignment for the benefit of creditors, or the admission in writing by
the Issuer of its inability to pay its debts generally as such debts
become due, or the taking of corporate action by the Issuer in
furtherance of any of the foregoing; or
(5) the payment by the Bond Insurer under either the Bond
Insurance Policy or the Surety Bond.
SECTION 6.02 Acceleration Of Maturity; Rescission And Annulment.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee may, with the consent of the Control Party, and shall if
instructed by the Control Party, declare all the Bonds to be immediately due and
payable, by a notice in writing to the Issuer and upon any such declaration such
Bonds, in an amount equal to the Aggregate Current Principal Amount of Bonds,
together with accrued and unpaid interest thereon to the Business Day preceding
the date of such acceleration, shall become immediately due and payable.
At any time after such a declaration of acceleration of maturity of the
Bonds has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter provided in this Article, the
Control Party, by written notice to the Issuer and the Trustee, may rescind and
annul such declaration and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all payments of principal of, and interest on, all Bonds
and all other amounts that would then be due hereunder or upon such
Bonds if the Event of Default giving rise to such acceleration had not
occurred;
(B) all amounts due to the Bond Insurer; and
(C) all sums paid by the Trustee hereunder and the reasonable
compensation, expenses and disbursements of the Trustee, its agents and
counsel;
(2) all Events of Default, other than the nonpayment of the
principal of or interest on Bonds that have become due solely by such
acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall effect any subsequent Default or impair any right in
connection therewith.
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SECTION 6.03 Remedies.
If an Event of Default shall have occurred and be continuing, the
Trustee may with the consent of the Control Party, and shall if instructed by
the Control Party, do one or more of the
following:
(a) institute Proceedings for the collection of all amounts
then payable on the Bonds or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Trust Estate securing the Bonds and from the Issuer amounts
adjudged due;
(b) sell the Trust Estate securing the Bonds 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;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate securing the Bonds; and
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies
of the Trustee or the Holders of the Bonds hereunder;
provided, however, that unless a declaration of acceleration has been made in
accordance with Section 6.02, notwithstanding subsection 3.10(c), the Trustee
may not sell or otherwise liquidate
the Trust Estate securing the Bonds.
SECTION 6.04 Preservation Of Trust Estate.
If an Event of Default shall have occurred and be continuing and no
Bonds have been declared due and payable or such declaration and its
consequences are rescinded and annulled, the Trustee may with the consent of the
Control Party, and shall if instructed by Control Party, retain possession of
the Trust Estate securing the Bonds intact, collect or cause the collection of
the proceeds thereof and make and apply all payments and deposits and maintain
all accounts in respect of such Bonds in accordance with the provisions of
Article III.
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SECTION 6.05 Trustee May File Proofs Of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial Proceeding relative to the Issuer or any other obligor upon the Bonds
or relative to the creditors or property of the Issuer or of such other obligor,
the Trustee (regardless of whether the Bonds shall then be due and payable as
therein expressed or by declaration or otherwise and regardless of whether the
Trustee shall have made any demand on the Issuer for the payment of any overdue
principal or interest) shall be entitled and empowered with the consent of the
Control Party and shall, at the direction of the Control Party (subject to
Section 7.01(c)(4) hereof), by intervention in such Proceeding or other wise, to
(a) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Bonds and to file such
other papers or documents, and to take such other actions, including
sitting on a committee of creditors, as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any claim for reimbursement of all
expenses and advances and, except as a result of Trustee's negligence
or bad faith, liabilities incurred and all advances made by the
Trustee) and of the Bondholders allowed in such Proceeding;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Bonds in any election of a trustee
or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency Proceedings or person
performing similar functions in comparable proceedings; and
(c) collect and receive any funds or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, custodian, or sequestrator (or
other similar official) in any such Proceeding is hereby au thorized by
each Bondholder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly
to the Bondholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses and disbursements of the Trustee, its
agents and counsel, any and all other expenses and, except as a result
of the Trustee's negligence or bad faith, liabilities incurred by the
Trustee and any other amounts due the Trustee under Section 7.07.
Amounts payable to the Trustee under this Section are intended to
constitute administrative expenses. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Bondholder any plan of reorganization, arrangement, adjustment, or
composition affecting any of the Bonds or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Bondholder in
any such Proceeding except to vote for election of a trustee in bankruptcy or
similar party as provided herein.
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SECTION 6.06 Trustee May Enforce Claims Without Possession Of Bonds.
All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any Proceeding relating thereto.
Any such Proceedings instituted by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the Holders of the Bonds and to Bond Insurer in respect of which such judgment
has been recovered and, in accordance with Section 6.07, for the payment of the
compensation and reasonable expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.07 Application Of Money Collected.
Except as provided in Section 6.04, if applicable, any money collected
by the Trustee pursuant to this Article or otherwise and any funds that may then
be held or thereafter received by the Trustee as security shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal or interest, upon
presentation of the Bonds and the notation thereon of such payment if only
partially paid and upon surrender thereof if fully paid:
first, To the payment of (x) the Guaranty Fee and the Surety
Fee and (y) the Guaranty Fee Arrearage and the Surety Fee
Arrearage, if any, commencing with the Payment Date occurring
on September 20, 1998 (except that no Insured Payments will be
used for such purpose);
second: To reimbursement of the Trustee for all expenses
associated with the disposition of the Collateral or other
remedies;
third: To the payment of any accrued and unpaid interest on
the Bonds at the Bond Interest Rate;
fourth: To the payment of the Aggregate Current Principal
Amount of the Bonds;
fifth: To the payment of any Reimbursement Amounts then due
and owing under the Reimbursement Agreement (as certified to
the Trustee by the Bond Insurer);
sixth: To the payment of all amounts due the Trustee under
Section 7.07;
seventh: To the payment of any unpaid amount due any
Accountants for services rendered pursuant to Section 9.12
hereof or otherwise under this Indenture;
eighth: To the Owner Trustee for amounts owed to the Owner
Trustee; and
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ninth: To the Administrator or any other person legally
entitled thereto, any remaining funds.
SECTION 6.08 Limitation On Suits.
No Holder of a Bond shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of Bonds representing not less than 25% of the
Aggregate Current Principal Amount of the Outstanding Bonds shall have
made written request to the Trustee to institute Proceedings in respect
of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
Proceeding;
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Control
Party; and
(6) the Control Party has otherwise consented to the
institution of such Proceeding;
it being understood and intended that no one or more Holders of Bonds shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Bonds or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of the
Holders of Bonds.
SECTION 6.09 Restoration Of Rights And Remedies.
If the Bond Insurer, the Trustee or any Bondholder 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 Bond Insurer, the Trustee or to such Bondholder,
then and in every such case the Issuer, the Bond Insurer, the Trustee and the
Bondholders 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 Bond
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Insurer, the Trustee and the Bondholders shall continue as though no such
Proceeding had been instituted.
SECTION 6.10 Rights And Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Bond
Insurer, the Trustee or to the Bondholders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.11 Delay Or Omission Not Waiver.
No delay or omission of the Bond Insurer, the Trustee or of any Holder
of any Bond to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such right
or remedy accruing upon any Event of Default or an acquiescence in or waiver of
the Event of Default. Every right and remedy given by this Article or by law to
the Bond Insurer, the Trustee or to the Bondholders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Bondholders, as the case may be.
SECTION 6.12 Control By Control Party.
Control Party shall have the right to direct the time, method and place
of conducting any Proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided that such
direction shall not be in conflict with any applicable rule of law or with this
Indenture; provided further, however, that, subject to Section 7.01, the Trustee
need not take any action that it determines might involve it in liability for
which it has not been indemnified.
SECTION 6.13 Waiver Of Past Defaults.
Control Party may on behalf of the Holders of all the Bonds waive any
past Default hereunder and its consequences. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 6.14 Undertaking For Costs.
All parties to this Indenture agree, and each Holder of any Bond by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any
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action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Bondholder, or group of Bondholders,
holding in the aggregate Bonds representing more than 10% of the Aggregate
Current Principal Amount of the Outstanding Bonds, or to any suit instituted by
any Bondholder for the enforcement of the payment of any installment of interest
on any Bond on or after the related Interest Payment Date expressed in such Bond
or for the enforcement of the payment of principal on such Bond (or, in the case
of any Bond called for redemption, on or after the applicable redemption date)
in accordance with the terms thereof.
SECTION 6.15 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, which may affect the covenants in, 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 Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 6.16 Sale Of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 6.03 shall not be exhausted by any one or more Sales
as to any portion of such Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate securing the Bonds shall have been sold
or all Outstanding Obligations shall have been paid. The Trustee may with the
consent of the Control Party, and at the direction of the Control Party shall,
from time to time postpone any Sale by public announcement made at the time and
place of such Sale. The Trustee hereby expressly waives its right to any amount
fixed by law as compensation for any Sale.
(b) The Trustee may with the consent of the Control Party, and at the
direction of the Control Party shall, on behalf of the Bondholders, bid for and
acquire any portion of the Trust Estate in connection with a public Sale
thereof, and may pay all or part of the purchase price by crediting against
amounts owing on the Bonds or other amounts secured by this Indenture, all or
part of the net proceeds of such Sale after deducting the costs, charges and
expenses incurred by the Trustee in connection with such Sale. The Bonds need
not be produced in order to complete any such Sale, or in order for the net
proceeds of such Sale to be credited against amounts owing on the Bonds. The
Trustee may hold, lease, operate, manage or otherwise deal with any property so
acquired in any manner permitted by law.
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(c) The Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Trust Estate in
connection with a Sale thereof. In addition, the Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to transfer and convey
its interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale. No purchaser or
transferee at such a Sale shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any funds.
SECTION 6.17 Action On Bonds.
The Trustee's right to seek and recover judgment on the Bonds or under
this Indenture shall not be affected by the seeking, obtaining or application of
any other relief under or with respect to this Indenture. Neither the lien of
this Indenture nor any rights or remedies of the Bond Insurer, the Trustee or
the Holders of Bonds shall be impaired by the recovery of any judgment by the
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Trust Estate or upon any of the assets of the Issuer.
SECTION 6.18 No Recourse To Issuer.
In the event of a Default, the Holders of the Bonds shall have no
recourse to the Issuer, except to the assets of the Issuer included in the Trust
Estate. The Trust Estate granted to the Trustee hereunder shall serve as
collateral security only for the Bonds and other obligations of the Issuer
hereunder, in the priority and to the extent set forth herein.
In addition, the Owner Trustee is entering into this Indenture solely
as owner trustee under the Trust Agreement and not in its individual capacity
and in no case whatsoever shall the Trust Company or the Owner Participants be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties, agreements or obligations of the Issuer or the
Owner Trustee hereunder as to all of which the parties hereto agree to look
solely to the assets of the Issuer.
SECTION 6.19 Unconditional Rights Of Bondholders To Receive
Principal And Interest.
Notwithstanding any other provision in this Indenture, other than the
provisions hereof limiting the right to recover amounts due on the Bonds to
recoveries from the property of the Trust Estate and from the Bond Insurance
Policy and Surety Bond, the Holder of any Bond shall have the right, to the
extent permitted by applicable law, which right is absolute and unconditional
except to the extent restricted by applicable law, (i) to receive payments of
interest on such Bond on each Interest Payment Date, (ii) to receive payments of
principal on such Bond at Stated Maturity (or, in the case of any Bond called
for redemption, on or after the date fixed for such redemption) and (iii) to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder; provided, however, no Holder of
a Bond shall have any right to institute any such suit, if and to the extent
that the institution or prosecution
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thereof or the entry of a judgment therein would, under applicable law, result
in the surrender, impairment, waiver or lien of this Indenture upon the Trust
Estate.
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ARTICLE VII
THE TRUSTEE
SECTION 7.01 Duties Of Trustee.
(a) Except during the continuance of an Event of Default:
(1) The Trustee undertakes to perform such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations of the Trustee shall be read into this Indenture; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. The Trustee shall, however, examine such certificates
and opinions to determine whether they conform to the requirements of
this Indenture.
(b) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) This Subsection shall not be construed to limit the effect
of Subsections (a) and (b) of this Section;
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that a
Responsible Officer was negligent in ascertaining the pertinent facts;
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
of the Control Party relating to the time, method and place of
conducting any Proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have
indemnity
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reasonable grounds for believing that repayment of such funds or
adequate against such risk or liability is not reasonably assured to
it. In determining that such repayment or indemnity is not reasonably
assured to it, the Trustee must consider not only the likelihood of
repayment or indemnity by or on behalf of the Issuer but also the
likelihood of repayment or indemnity from amounts payable to it from
the applicable Trust Estate pursuant to Sections 7.07 and 9.01(d).
SECTION 7.02 Notice Of Default.
Within 30 days after the occurrence of any Default (immediately with
respect to notice to the Bond Insurer), the Trustee shall transmit by mail to
the Bond Insurer and all Holders of Bonds, as their names and addresses appear
on the Bond Register, notice of such Default hereunder known to a Responsible
Officer of the Trustee, unless such Default shall have been cured or waived;
provided, that, except in the case of a Default in the payment of the principal
of or interest on any Bond, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders of the Bonds; provided, further, that in the case of any Default of the
character specified in Section 6.01(3) or 6.01(4) no such notice to Bondholders
shall be given until at least 60 days after the occurrence thereof. The Trustee
shall not be deemed to have knowledge of any fact, matter or circumstance
hereunder, the occurrence or non-occurrence of which would require it to take
any action (or omit to take such action) hereunder unless a Responsible Officer
of the Trustee shall have actual knowledge of the occurrence or non-occurrence
thereof.
SECTION 7.03 Certain Rights Of Trustee.
Except as otherwise provided in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically required) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) as a condition to the taking, suffering or omitting of any action
by it hereunder, the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of
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Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon; and
(e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with
due care by it hereunder.
SECTION 7.04 Not Responsible For Recitals Or Issuance Of Bonds.
The recitals contained herein and in the Bonds, except the certificates
of authentication on the Bonds, shall be taken as the statements of the Issuer,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations with respect to the Trust Estate, the Policies or as to
the validity or sufficiency of this Indenture, the Trust Estate, the Policies or
the Bonds. The Trustee shall not be accountable for the use or application by
the Issuer or the Owner Trustee of Bonds or the proceeds thereof or any money
paid to the Issuer or the Owner Trustee or upon Issuer Order pursuant to the
provisions hereof.
SECTION 7.05 May Hold Bonds.
The Trustee, any Agent, the Administrator or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Bonds and, subject to Sections 7.08 and 7.13, may otherwise deal with the
Issuer or any Affiliate of the Issuer with the same rights it would have if it
were not Trustee, Agent, Administrator or such other agent.
SECTION 7.06 Money Held In Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by this Indenture or by
applicable law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer and
except to the extent of income or other gain on investments that are obligations
of State Street Bank and Trust Company in either its commercial or trust
capacity hereunder.
SECTION 7.07 Compensation And Reimbursement.
(a) The Issuer agrees:
(1) to pay or to cause the Administrator to pay the Trustee
from time to time reasonable compensation for all services rendered by
it hereunder (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse or to cause the Administrator to reimburse the Trustee upon
its request for all reasonable expenses,
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disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence, willful misconduct or bad
faith; and
(3) to indemnify or to cause the Administrator to indemnify
the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence, wilful misconduct or bad faith
on its part, arising out of, or in connection with, the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim in connection with the exercise or
performance of any of its powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall
have given the Issuer and the Administrator written notice
thereof promptly after the Trustee shall have knowledge
thereof (provided, that failure to give such notice shall not
alter the Issuer's obligations hereunder, unless such failure
materially adversely affects the Issuer);
(ii) while maintaining absolute control over its own
defense, the Trustee shall cooperate and consult fully with
the Issuer and the Administrator in preparing such defense;
and
(iii) notwithstanding anything to the contrary in
this Subsection, neither the Issuer nor the Administrator
shall be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Issuer
and the Administrator.
(b) To secure the Trustee's right to receive amounts pursuant to this
Section 7.07, the Trustee shall have a lien against the Trust Estate prior in
right to all other parties, except that such lien shall at all times be
subordinate to the lien in favor of the Bondholders and the Bond Insurer. The
Trustee hereby agrees not to cause the filing of a petition in bankruptcy
against the Issuer for the non-payment to the Trustee of any amounts provided by
this Section 7.07 until at least 366 days after the payment in full of all Bonds
issued under this Indenture.
SECTION 7.08 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.310(a)(1) and (a)(5). The Trustee shall always have a
combined capital and surplus as stated in Section 7.09. The Trustee shall be
subject to TIA ss.310(b), including the optional provision
permitted by the second sentence of TIA ss.310(b)(9).
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SECTION 7.09 Trustee's Capital And Surplus.
The Trustee shall at all times have a combined capital and surplus of
at least $50,000,000. If the Trustee publishes annual reports of condition of
the kind described in TIA ss.310(a)(2) its combined capital and surplus for
purposes of this Section 7.09 shall be as set forth in the latest such report.
SECTION 7.10 Resignation And Removal; Appointment Of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by, and transfer of the Trust Estate to, the successor
Trustee under Section 7.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Bond Insurer and the Issuer. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Bond Insurer and the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by the Control Party by
delivering notice thereof to the Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall have a conflicting interest prohibited
by Section 7.08 and shall fail to resign or eliminate such conflicting
interest in accordance with Section 7.08 after written request therefor
by the Bond Insurer, the Issuer or by any Bondholder, or
(2) the Trustee shall cease to be eligible under Section 7.09
and shall fail to resign after written request therefor by the Bond
Insurer, the Issuer or by any such Bondholder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by an Issuer Order may remove the Trustee
with the Consent of the Bond Insurer, (ii) subject to Section 6.14, any
Bondholder who has been a bona fide Holder of a Bond for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee with the consent of the Bond Insurer or (iii) the Bond
Insurer may remove the Trustee.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Issuer, by an Issuer Order, shall promptly appoint a successor Trustee with
the consent of the Bond Insurer. If within one year after such resignation,
removal or incapability or the occurrence of such vacancy, a successor Trustee
shall be appointed by the Control Party by notice delivered to the Issuer and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by the Issuer. If no successor Trustee shall
have been so appointed by the Issuer, or the Bondholders or the Bond Insurer and
shall have accepted appointment in the manner hereinafter provided, any
Bondholder who has been a bona fide Holder of a Bond for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Bond Insurer
and the Holders of Bonds as their names and addresses appear in the Bond
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
SECTION 7.11 Acceptance Of Appointment By Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee. Notwithstanding the foregoing, on request of the
Issuer or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 7.07. Upon request of any such successor
Trustee, the Issuer shall execute and deliver any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, and powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 7.12 Merger, Conversion, Consolidation Or Succession To
Business Of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, automatically shall be the successor of the Trustee
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hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Bonds have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Bonds so authenticated with the same effect
as if such successor Trustee had authenticated such Bonds.
SECTION 7.13 Preferential Collection Of Claims Against Issuer.
The Trustee shall be subject to TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b), and a Trustee who has resigned or been
removed shall be subject to TIA ss.311(a) to
the extent indicated.
SECTION 7.14 Co-trustees And Separate Trustees.
At any time or times, for the purpose of meeting the legal requirements
of the TIA or of any jurisdiction in which any of a Trust Estate may at the time
be located, the Issuer and the Trustee shall have power to appoint, and, upon
the written request of the Trustee or of the Control Party, the Issuer shall for
such purpose join with the Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint one or more
Persons approved by the Trustee either to act as co-trustee, jointly with the
Trustee, of all or any part of such Trust Estate, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Issuer does not join in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default has occurred and is continuing, the Trustee alone
shall have power to make such appointment.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged
and delivered by the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(1) The Bonds shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect to the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall
be exercised, solely by the Trustee.
(2) The rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the
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Trustee or by the Trustee and such co-trustee or separate trustee jointly, as
shall be pro vided in the instrument appointing such co-trustee or separate
trustee, except to the extent that, under any law of any jurisdiction in which
any particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(3) The Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by an
Issuer Order, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section, and, in case an Event of
Default has occurred and is continuing, the Trustee shall have power to
accept the resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Issuer. Upon the written request
of the Trustee, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed
may be appointed in the manner provided in this Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee, or
any other such trustee hereunder and the Trustee shall not be
personally liable by reason of any act or omission of any co-trustee or
other such separate trustee hereunder.
(5) Any Act of Bondholders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and separate
trustee.
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ARTICLE VIII
BONDHOLDERS' LIST AND REPORTS
SECTION 8.01 Issuer To Furnish Trustee Names And Addresses Of
Bondholders.
The Issuer will furnish or cause to be furnished to the Trustee and the
Bond Insurer (i) semiannually, not less than 45 days nor more than 60 days after
each Interest Payment Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Bonds as they appear on
the Bond Register, and (ii) at such other times, as the Trustee or the Bond
Insurer 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 Trustee is the Bond Registrar, no such list shall be required to be
furnished.
SECTION 8.02 Preservation Of Information; Communications To
Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Bonds contained in the
most recent list, if any, furnished to the Trustee as provided in Section 8.01
and the names and addresses of the Holders of Bonds received by the Trustee in
its capacity as Bond Registrar. The Trustee may destroy any list furnished to it
as provided in Section 8.01 upon receipt of a new list so furnished.
(b) Bondholders may communicate pursuant to TIA ss.312(b) with other
Bondholders with respect to their rights under this Indenture or under the
Bonds.
(c) The Issuer, the Trustee and the Bond Registrar shall have the
protection of TIA ss.312(c).
SECTION 8.03 Reports By Trustee.
(a) In addition to the Payment Date Statement pursuant to Section 3.05,
within 60 days after December 31 of each year, (the "Reporting Date"),
commencing with the year 1997, the Trustee shall, mail to the Bond Insurer and
to all Holders a brief report dated after the Reporting Date that complies with
TIA ss.313(a). The Trustee shall also mail to the Bond Insurer and to all
Holders a brief report that complies with TIA ss.313(b)(1), together with an
Opinion of Counsel that complies with TIA ss.314(d)(1), if required, as to any
release, or any release and substitution, of any portion of the Trust Estate,
within 90 days after such release. The Trustee shall mail to the Bond Insurer
and to Holders of Bonds with respect to which it has made advances any reports
with respect to such advances that are required by TIA ss.313(b)(2), any such
report to be mailed within 90 days of any such advance. For purposes of the
information required to be included in any such reports pursuant to TIA
ss.313(a)(2) or ss.313(b), the principal amount of indenture securities
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outstanding on the date as of which such information is provided shall be the
Aggregate Current Principal Amount of the then Outstanding Bonds.
(b) A copy of each report required under this Section shall, at the
time of such transmission to Holders of Bonds be filed by the Trustee with the
Commission and with each securities exchange upon which the Bonds are listed.
The Issuer will notify the Trustee when the Bonds are
listed on any securities exchange.
(c) The Issuer shall supply to the Trustee at least fifteen calendar
days prior to any applicable filing prescribed by law or Internal Revenue
Service regulation, and the Trustee, as agent for the Issuer, shall transmit by
mail, to each Holder of Bonds, as his name and address appears in the Bond
Register for and to the Internal Revenue Service, within the time limits
prescribed by law, the amounts of interest and original issue discount (which
original issue discount shall be calculated by the Issuer), if any, paid or
accrued with respect to Bonds held by such Bondholder.
SECTION 8.04 Reports By Issuer.
(a) The Issuer (i) shall file with the Bond Insurer and the Trustee
within 15 days after it files them with the Commission copies of the annual
reports and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Issuer is required to file with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and (ii)
shall also comply with the other provisions of TIA ss.314(a).
(b) The Issuer shall promptly file, and exercise its reasonable best
efforts to obtain a favorable response to, no-action requests to, or other
appropriate exemptive relief from, the Commission seeking the usual and
customary exemption from such reporting requirements granted
to issuers of securities similar to the Bonds.
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ARTICLE IX
COVENANTS OF ISSUER
SECTION 9.01 Maintenance Of Office Or Agency.
The Issuer will maintain an office or agency within the United States
of America where Bonds may be presented or surrendered for payment or may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Bonds and this Indenture may be
served. The Issuer hereby initially appoints the Trustee to serve, and the
Trustee may appoint an agent to serve, as such office or agency. The Issuer will
give prompt written notice to the Trustee of the location and any change in the
location, of such office or agency. Until written notice of any change in the
location of such office or agency is delivered to the Trustee or if at any time
the Issuer shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office and the
Issuer hereby appoints the Trustee as its agent for the foregoing purposes.
SECTION 9.02 Money For Bond Payments To Be Held In Trust.
Whenever the Issuer shall have one or more Paying Agents, the Trustee
will, on each Payment Date or Redemption Date, withdraw from the Collateral
Proceeds Account and, if applicable, the Reserve Fund and deposit with such
Paying Agent cash in an amount sufficient to pay principal of or interest on the
Bonds with respect to the related Interest Accrual Period, such sum to be held
in trust for the benefit of the Persons entitled to such principal or interest,
and (unless such Paying Agent is the Trustee) the Issuer will promptly notify
the Bond Insurer and the Trustee of its action or failure to so act.
The initial Paying Agent shall be the Trustee. Any additional or
successor Paying Agent shall be appointed by Issuer Order. The Issuer shall not
appoint any Paying Agent that is not, at the time of such appointment, a
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal or state banking authorities. The Issuer will cause each
Paying Agent, other than the Trustee, to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all amounts held by it for the payment of principal
of or interest on the Bonds in trust for the benefit of the Persons
entitled thereto until such amounts shall be paid to such Persons or
otherwise disposed of as herein provided and pay such amounts to
such Persons as herein provided;
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(2) give the Bond Insurer and the Trustee notice of any
Default by the Issuer (or any other obligor upon the Bonds) in the
making of any payment of principal or interest; and
(3) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee
all amounts so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all amounts held
in trust by the Issuer or such Paying Agent, such amounts to be held by the
Trustee upon the same trusts as those upon which such amounts were held by the
Issuer or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer, in trust for the payment of the principal of or interest on any
Bond and remaining unclaimed for six years after the related Payment Date shall
be paid to the Issuer on Issuer Request, or (if then held by the Issuer) shall
be discharged from such trust; and the Holder of such Bond shall thereafter, as
an unsecured general creditor, look only to the Issuer for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money (but only to the extent of the amounts so paid to the Issuer), and all
liability of the Issuer as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such release of payment, may at the expense 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 New York, New York
and in the city in which the Issuer's office is located pursuant to Section
9.01, 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 Trustee may also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such release of payment (including, but not
limited to, mailing notice of such release to Holders whose Bonds have been
called but have not been surrendered for redemption or whose right to or
interest in funds due and payable but not claimed is determinable from the
records of any Paying Agent, at the last address of record of each such Holder).
SECTION 9.03 Issuer's Existence.
The Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the state of its organization
and will obtain and preserve its qualification to do business as a foreign
business trust in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture and the
Bonds.
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SECTION 9.04 Protection Of 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 as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien (and the priority thereof)
of this Indenture or
to carry out more effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the validity of,
any Grant made or to
be made by this Indenture;
(iv) enforce any of the Student Loans; or
(v) preserve and defend title to the Trust Estate, and the
rights of the Trustee and of the Bondholders secured thereby, against
the claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required pursuant to this Section.
The Issuer shall pay or cause to be paid any taxes levied on the
account of the beneficial ownership by the Issuer or an Affiliate of the Issuer
of the Student Loan Collateral that secures
the Bonds.
SECTION 9.05 Performance Of Obligations.
(a) The Issuer will punctually perform and observe all of its
obligations and covenants contained in the Trust Agreement, the Servicing
Agreement, the Administration Agreement, the
Reimbursement Agreement and the Origination Agreements.
(b) The Issuer will not knowingly take any action or permit any action
to be taken by others which would release any Person from any of such Person's
covenants or obligations under any instrument included in the Trust Estate or
under the Policies, or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument, except as expressly provided in this
Indenture or such other instrument.
(c) The Issuer may contract with other Persons to perform certain
obligations of the Issuer hereunder, and performance by any such Persons
identified to the Trustee in an Officer's Certificate of the Issuer shall be
deemed to be performance of such obligations by the Issuer.
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Initially, the Issuer has contracted with the Administrator to assist the Issuer
in performing its duties under this Indenture.
SECTION 9.06 Negative Covenants.
Until the conditions of Section 5.01 have been satisfied, the Issuer
will not without the consent of the Control Party:
(i) sell, transfer, exchange or otherwise dispose of, or
pledge, mortgage, hypothecate, or otherwise encumber (or permit such to
occur or suffer to exist) any part of the Trust Estate except as
expressly permitted by this Indenture;
(ii) claim any credit on, or make any deduction from, the
principal or interest payable in respect of the Bonds by reason of the
payment of any taxes levied or assessed
upon any portion of the Trust Estate; or
(iii) engage in any business or activity other than in
connection with, or relating to, the issuance of Bonds and other than
as permitted or contemplated by the Trust Agree
ment.
SECTION 9.07 Servicer's Annual Statement As To Compliance.
The Issuer shall cause the Servicer to deliver to the Bond Insurer and
the Trustee, on or prior to March 31 of each year, commencing March 31, 1999, a
written statement signed by an
officer of the Servicer stating that:
(1) a review of the activities of the Servicer, and the
Servicer's performance under the Servicing Agreement for the previous
twelve months ending December 31, has
been made under such servicing officer's supervision; and
(2) to the best of such officer's knowledge, based on such
review, the Servicer has or has caused to be performed all of its
obligations under the Servicing Agreement throughout such year and that
no Default has occurred, or, if such Default has occurred and is
continuing, specifying each such Default, the nature and status
thereof, and the steps necessary to remedy such Default.
SECTION 9.08 Corporate Existence Of Owner Trustee.
(a) Subject to Subsections (b) and (c) hereof, the Owner Trustee will
keep in full effect its existence, rights and franchises as a banking
corporation under the laws of the State of
Delaware.
(b) Any corporation into which the Owner Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which such
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Owner Trustee shall be a party, shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which any such Owner
Trustee may seek to retain certain powers, rights and privileges theretofore
obtaining for any period of time following such merger or consolidation, to the
contrary notwithstanding.
(c) Any successor to the Owner Trustee appointed pursuant to the Trust
Agreement shall be the successor Owner Trustee under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto.
(d) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person formed by or surviving such consolidation or merger
(if other than the Owner Trustee) or the Person succeeding to the Owner Trustee
under the Trust Agreement may exercise every right and power of, the Owner
Trustee, on behalf of the Issuer under this Indenture with the same effect as if
such Person had been named as the Owner Trustee herein.
SECTION 9.09 No Other Business.
The Issuer shall not engage in any business other than financing,
purchasing, owning, selling and managing of Student Loans in the manner
contemplated by this Indenture and all activities incidental thereto.
SECTION 9.10 No Borrowing.
The Issuer shall not issue, incur, assume, guarantee or otherwise
become liable, directly or indirectly, for any indebtedness except for the
Bonds.
SECTION 9.11 Obligations Of The Servicer.
The Issuer shall cause the Servicer (a) to comply with the Servicing
Agreement and the Custodial Agreement and (b) to deliver to the Bond Insurer and
the Rating Agencies within 30 days following the end of each calendar quarter,
the related Servicer Remittance Reports for such
calendar quarter.
SECTION 9.12 Servicer's Evidence As To Compliance.
For such time as the Issuer is required to file reports or information
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Issuer shall cause the Servicer on or before March 31 of each
calendar year, commencing with the year 1999, to cause a firm of Accountants to
furnish a report to the Bond Insurer, the Trustee and the Issuer to the effect
that such firm has examined certain documents and records relating to the
servicing of the Student Loans, compared the information contained in the
Servicer Remittance Reports delivered during the period covered by the report
with such documents and records relating to the servicing
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of the Student Loans and that, on the basis of such examination and comparison,
nothing has come to the attention of such accountants to indicate that such
servicing was not in compliance with The National Collegiate Trust's GATESM
Policies and Procedures Manual and the Servicing Agreement except for such
exceptions or errors as such firm shall believe to be immaterial and such other
exceptions as shall be set forth in such statements.
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ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01 Supplemental Indentures Without Consent Of Bondholders.
Without the consent of the Holders of any Bonds, the Issuer and the
Trustee, by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto, with the consent of the Bond Insurer
and the Trustee, for any of the following
purposes:
(1) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to
the lien of this Indenture additional property;
(2) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of issue, authentication and
delivery of the Bonds;
(3) to evidence the succession of another Person to the
Issuer, and the assumption by any such successor of the covenants of
the Issuer herein and in the Bonds contained;
(4) to add to the covenants of the Issuer or the Trustee for
the benefit of the Bond Insurer or the Holders of the Bonds or to
surrender any right or power herein conferred upon the Issuer;
(5) to convey, transfer, assign or pledge any property to or
with the Trustee;
(6) to cure any ambiguity, to amend, correct or supplement any
provision herein or in any supplemental indenture that may be
defective, ineffective or inconsistent with any other provision herein
or in any supplemental indenture, or to make any other provisions with
respect to matters or questions relating to this Indenture or in any
supplemental indenture; provided that such action shall not adversely
affect the interests of the Bond Insurer or the Holders of Outstanding
Bonds;
(7) to provide for the issuance of Bonds in bearer form with
coupons ("Bearer Bonds") and for the exchangeability of Bearer Bonds
and Bonds issued in registered form ("Registered Bonds"); any such
supplemental indenture may also contain any provisions as may in the
Issuer's judgment be necessary, appropriate or convenient (a) to permit
the Bonds to be issued and sold to or held in bearer form by non-United
States Persons, (b) to establish entitlement to an exemption from
United States withholding tax or reporting requirements with respect to
payments on the Bonds, (c) to comply, or facilitate compliance, with
other applicable laws or regulations, (d) to provide for usual and
customary provisions for communication (by notice publication,
maintenance of lists of
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holders of Bearer Bonds who have provided names and addresses for such
purpose, or otherwise) with holders of Bearer Bonds, or (e) to
otherwise effectuate provisions for the issuance of Bearer Bonds and
their exchangeability with Registered Bonds;
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the
provisions of this Indenture as shall be necessary to facilitate the
administration of the Trust hereunder by more than one Trustee,
pursuant to the requirements of Section 7.11 or 7.12 hereof;
(9) 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 TIA, or under any similar federal
statute hereafter enacted or to conform the provisions of this
Indenture to TIA, as amended from time to time, and to add to this
Indenture such other provisions as may be expressly required by TIA;
(10) to amend the provisions of Article XIII in accordance
with Section 13.03 thereof; or
(11) to provide for the maintenance of the rating on the
Bonds, at the option of the Issuer.
SECTION 10.02 Supplemental Indentures With Consent Of Bondholders.
With the consent of the Control Party as evidenced by notice delivered
to the Bond Insurer, the Issuer and the Trustee, the Issuer and the Trustee, by
an Issuer Order, may enter into an inden ture or indentures supplemental hereto
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of such Bonds under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Bond affected thereby:
(1) change the Stated Maturity of, or the Interest Payment
Date for, any Bond or reduce the principal amount thereof, the Bond
Interest Rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
proceeds of the Trust Estate to the payment of principal of the Bonds
or change any place of payment where, or the coin or currency in which,
any Bond or any interest thereon is payable, or impair the right to
institute suit for the enforcement of the payment of any installment of
interest due on any Bond on or after the related Interest Payment Date
or for the enforcement of the payment of the entire remaining unpaid
principal amount of any Bond on or after Stated Maturity (or, in the
case of redemption, on or after the applicable Redemption Date);
(2) reduce the percentage of the Aggregate Current Principal
Amount of the Outstanding Bonds, the consent of the Holders of which is
required for any such
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supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with provisions of this Indenture
or Defaults hereunder and their consequences provided for in this
Indenture;
(3) modify any of the provisions of this Section or Section
6.13, except to increase any percentage specified therein or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each
Outstanding Bond affected thereby;
(4) modify the definition of the terms "Outstanding";
"Outstanding Obligations" or "Control Party";
(5) 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
Trust Estate or terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Bond
of the security afforded by the lien of this Indenture;
(6) modify any of the provisions of this Indenture in such
manner as to affect the calculation of principal and interest payable
on the Bonds on any Payment Date (including the components of any such
calculations), adversely affect the rights of the Holders of Bonds to
the benefits of any provisions for the mandatory redemption of Bonds
contained herein, or to adversely affect the rights of the Bond Insurer
or the Bondholders to any amounts deposited in the Reserve Fund;
(7) modify or alter any of the provisions of Section 6.16;
(8) impair or adversely affect the Trust Estate except as
otherwise permitted herein; or
(9) change the percentage required to declare an acceleration
of the Bonds pursuant to Section 6.02.
The Trustee shall determine whether the interests of the Holders of the
Bonds would be adversely affected by any supplemental indenture and any such
determination shall be conclusive upon the Bond Insurer and the Holders of all
Bonds, whether theretofore or thereafter authenticated and delivered hereunder.
The Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for the Control Party under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if the Control Party shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Bond Insurer and the Holders of the Bonds
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as their names appear on the Bond Register, a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 10.03 Execution Of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and, subject to Section 7.01, 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 Trustee may, but shall not,
except to the extent required in the case of a supplemental indenture entered
into under Section 10.01(9), be obligated to, enter into any such supplemental
indenture that affects the Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise except to the extent required by
law.
SECTION 10.04 Effect Of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Bonds theretofore or thereafter authenticated and delivered hereunder and
affected by such supplemental indenture shall be bound thereby.
SECTION 10.05 Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of TIA as then in effect.
SECTION 10.06 Reference In Bonds To Supplemental Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Bonds so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Bonds.
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ARTICLE XI
REDEMPTION OF BONDS
SECTION 11.01 REDEMPTION AT THE OPTION OF THE ISSUER; ELECTION TO
REDEEM.
(a) The Bonds shall be redeemable, at the option of the Issuer at the
Redemption Price, in part, not to exceed five (5%) percent of the Aggregate
Current Principal Amount of Bonds, upon Issuer Order delivered to the Trustee at
any time during the 60 day period following the Closing Date.
(b) The Bonds shall be redeemable at the option of the Issuer at the
Redemption Price in whole, when the Aggregate Current Principal Amount of Bonds
is ten percent (10%) or less of the Aggregate Current Principal Amount of Bonds
as of the Closing Date.
(c) Interest due on or prior to a Redemption Date shall continue to be
payable to the Holders of such Bonds as of the relevant Record Dates according
to their terms and the provisions of Section 3.02. The election of the Issuer to
redeem any Bonds pursuant to this Section 11.01 shall be evidenced by an Issuer
Order directing the Trustee to make the payment of the Redemption Price of all
of the Bonds to be redeemed from funds in the Collateral Proceeds Account and
the Reserve Fund and for funds deposited with the Trustee by the Issuer pursuant
to Section 11.04.
The Issuer shall set the Redemption Date and the Record Date and give
notice thereof to the Trustee pursuant to Section 11.02. Insured Payments under
the Bond Insurance Policy will be made only at the time set forth in the Bond
Insurance Policy. No accelerated Insured Payments will be made regardless of any
optional redemption of the Bonds unless such redemption is made at the request
of the Bond Insurer.
SECTION 11.02 Notice To Trustee And The Bond Insurer.
In case of any redemption pursuant to Section 11.01, the Issuer shall
at least 45 days prior to the Redemption Date (unless a shorter period shall be
satisfactory to the Trustee and the Bond Insurer), notify the Trustee and the
Bond Insurer by an Officers' Certificate of such Redemption Date, the Record
Date and the principal amount of Bonds to be redeemed on such Redemption Date.
SECTION 11.03 Notice Of Issuer Redemption.
Notice of redemption pursuant to Section 11.01 shall be given by
first-class mail, postage prepaid, mailed not less than fifteen days prior to
the applicable Redemption Date, to the Bond Insurer and to each Holder of Bonds
to be redeemed (as of the close of business of the Record Date) pursuant to
Section 11.01 at its address appearing in the Bond Register.
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All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the fact that the Bonds are to be redeemed in part or in
full, as the case may be, and that interest thereon shall accrue up to
the Business Day preceding such Redemption Date; and
(4) the address where such Bonds are to be surrendered for
payment of the Redemption Price, which shall be the office or agency of
the Issuer to be maintained as provided in Section 9.01.
Notice for redemption of Bonds shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Bond selected for redemption shall not impair or affect the validity of the
redemption of any other Bond.
SECTION 11.04 Deposit Of Redemption Price.
In the case of all redemptions, on or before the Business Day
immediately preceding the related Redemption Date, the Issuer shall deposit in
the Collateral Proceeds Account with the Trustee or with a Paying Agent cash in
an amount sufficient to provide for payment of the Re demption Price of all of
the Bonds that are to be redeemed on such Redemption Date (unless such payment
is to be made solely from the Collateral Proceeds Account or the Reserve Fund),
plus any outstanding fees and expenses of the Trustee.
SECTION 11.05 Bonds Payable On Redemption Date.
Notice of redemption pursuant to Section 11.01 or having been given as
provided in Section 11.02, the Bonds to be so redeemed shall, on the applicable
Redemption Date, become due and payable at the Redemption Price and as of the
Business Day preceding such Redemption Date (unless the Issuer shall Default in
the payment of the Redemption Price) such Bonds shall cease to bear interest. On
or after the Redemption Date, such Bonds shall be paid by the Issuer at the
Redemption Price; provided, however, that payments due on a Payment Date on or
prior to the Redemption Date shall be payable to the Holders of such Bonds
registered as such on the relevant Record Dates according to their terms and the
provisions of Section 3.02.
If Bonds are redeemed in part pursuant to Sections 11.01(a), the
redemption shall be pro rata in respect of all Outstanding Bonds. If any Bond
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal thereof shall, until paid, bear interest up to the
Business Day prior to the relevant Redemption Date at the Bond Interest Rate.
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ARTICLE XII
BONDHOLDERS' MEETING
SECTION 12.01 Purposes For Which Meetings May Be Called.
A meeting of the Holders of Bonds may be called at any time and from
time to time pursuant to the provisions of this Article for any of the following
purposes to the extent not otherwise reserved for exercise by the Control Party
pursuant to Section 6.12 hereof:
(1) to give any notice to the Issuer or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiver of any
Default hereunder and its consequences, or to take any other action
authorized to be taken by Bondholders pursuant to any of the provisions
of Article VI;
(2) to remove the Trustee and appoint a successor Trustee
pursuant to the provisions of Article VII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Article X; or
(4) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the Bonds under any other provision of this Indenture or under
applicable law.
SECTION 12.02 Manner Of Calling Meetings.
The Trustee may at any time call a meeting of Bondholders to take any
action specified in Section 12.01, to be held at such time and at such place in
the United States of America as the Trustee shall determine. Notice of every
meeting of the Bondholders, setting forth the time and the place of such meeting
and in general terms the actions proposed to be taken at such meeting, shall be
mailed to the Bond Insurer and to such Bondholders not less than 20 nor more
than 60 days prior to the date fixed for the meeting as provided in Section
13.05. The Trustee may fix, in advance of the giving of such notice, a date as
the record date for determining the Bondholders entitled to notice of or to vote
at any such meeting not more than 15 days prior to the date fixed for the giving
of such notice.
SECTION 12.03 Call Of Meeting By Issuer Or Bondholders.
In case at any time the Issuer, pursuant to an Issuer Order, or the
Holders representing at least 10% of the Aggregate Current Principal Amount of
the Outstanding Bonds, shall have requested the Trustee to call a meeting of
Bondholders to take any action authorized in Section 12.01 by written request
setting forth in reasonable detail the action proposed to be taken at the
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meeting, and the Trustee shall not have mailed notice of such meeting within 20
days after receipt of such request, then the Issuer or the Holders of Bonds in
the amount above specified may determine the time and the place for such
meeting, the record date for determining the Bondholders entitled to notice of
or to vote at such meeting, and may call such meeting to take any action
authorized in Section 12.01, by mailing notice thereof as provided in Section
12.02.
SECTION 12.04 Who May Attend And Vote At Meetings.
To be entitled to vote at any meeting of Bondholders a Person shall (a)
be a Holder, as of the record date set for such meeting, of one or more Bonds
will respect to which such meeting was called or, (b) be a Person appointed by
an instrument in writing as proxy by a Holder of one or more such Bonds. The
only Persons who shall be entitled to be present or to speak at any meeting of
Bondholders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee, the Issuer, the Bond Insurer and
their respective counsel.
SECTION 12.05 Regulations May Be Made By Trustee.
Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Bondholders, in regard to proof of the holding of Bonds and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting.
Except as otherwise permitted or required by any such regulations, the holding
of Bonds shall be proved in the manner specified in Section 13.03(c) and the
appointment of any proxy shall be proved in the manner specified in Section
13.03; provided, however, that such regulations may provide that written
instruments appointing proxies regular on their face may be presumed valid and
genuine without the proof hereinabove or in Section 13.03 specified.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the Issuer
or by Bondholders as provided in Section 12.03, in which case the Issuer or the
Bondholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Bonds represented at the meeting.
At any meeting each Holder of Bonds or any proxy shall be entitled to
one vote for each $25,000 principal amount of Outstanding Bonds held or
represented by him, provided, however, that no vote shall be cast or counted at
any meeting in respect of the principal amount of any Bond challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote other than by virtue of
Bonds held by him or by virtue of instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Bondholders. Any
meeting of Bondholders duly called pursuant to the provisions of Section 12.02
or Section 12.03 may be adjourned from time to time, and the meeting so
adjourned may be held without further notice, except as given at the meeting.
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At any meeting of Bondholders, the presence of Persons holding or
representing Bonds in an aggregate principal amount sufficient to take action on
the business for the transactions of which such meeting was called shall
constitute a quorum, but, if less than a quorum is present, the Persons holding
or representing a majority in aggregate principal amount of the Bonds
represented at the meeting may adjourn such meeting with the same effect, for
all intents and purposes, as though a quorum had been present, and the meeting
may be held as so adjourned without further notice, except as given at the
meeting.
SECTION 12.06 Manner Of Voting At Meetings And Records To Be Kept.
The vote upon any matter submitted to any meeting of Bondholders shall
be by written ballots on which shall be subscribed the signatures of the Holders
of Bonds or of their representatives by proxy and the serial number or numbers
of the Bonds held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Bondholders shall be prepared by the secretary of the meeting and
there shall be attached to such record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that such notice was mailed as provided in Section 12.02. The record
shall show the serial numbers of the Bonds voting in favor of and against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Issuer and the other to the Trustee to be preserved by the
Trustee.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 12.07 Exercise Of Rights Of Trustee And Bondholders Not
To Be Hindered Or Delayed.
Nothing in this Article shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of Bondholders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Bondholders under any of the provisions of this Indenture or
of the Bonds.
SECTION 12.08 Bond Insurer As Bondholder.
The Bond Insurer, for purposes of this Article XII, shall be deemed the
100% Bondholder; provided, however, that if a Bond Insurer Default shall have
occurred and be continuing, the Bond Insurer shall not be deemed a Bondholder.
<PAGE>
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.01 Compliance Certificates And Opinions.
Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee (with a copy to the Bond Insurer) an Officer's Certificate stating
that all conditions precedent (including any covenant with which compliance
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, 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 relating to such
particular application or request, 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:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion whether such covenant or condition
has been complied with; and
(d) a statement whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 13.02 Form Of Documents Delivered To 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.
<PAGE>
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Any certificate or opinion of an Authorized Officer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by counsel, unless such Authorized 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 or opinion of an Authorized
Officer or any Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, one or more
officers of the Issuer, the Owner Trustee or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Issuer, the Owner Trustee, or the Administrator unless such Authorized Officer
or counsel knows that the certificate or opinion or representations with respect
to such matters are erroneous. Any Opinion of Counsel may also be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer, stating that the information with
respect to such matters is in the possession of the Owner Trustee or the
Administrator, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
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.
SECTION 13.03 Acts Of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by agent
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 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
Bondholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person or any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Bonds shall bind the Holder (and any
transferee thereof) of every
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Bond issued upon the registration of, in respect of anything done, omitted or
suffered to be done by the Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Bond.
(e) The Issuer and (during the continuance of any Event of Default) the
Trustee shall fix, in advance, a date as the record date for determining, the
Bondholders entitled to consent to or vote on any action required or permitted
to be consented to or voted upon by or on behalf of the Bondholders of any
specified Aggregate Current Principal Amount of the Bonds.
SECTION 13.04 Notices.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Bondholders or other documents provided or permitted by this
Indenture to be made upon, given
or furnished to, or filed with:
(1) the Trustee by any Bondholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Issuer by the Trustee or by any Bondholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class postage prepaid, to the Issuer addressed to it at c/o
Delaware Trust Capital Management, Inc., 900 Market Street, Wilmington,
Delaware 19801, Attention: Richard N. Smith, with a copy to the
Administrator at First Marblehead Data Services Inc., 237 Park Avenue,
New York, New York 10017, Attention: Stephen Anbinder, or at any other
address previously furnished in writing to the Trustee by the Issuer or
the Administrator.
(b) Wherever notice is required to be given to or from the Issuer, a
Bondholder or the Trustee pursuant to this Indenture, a copy of such notice
shall also be delivered to the Bond
Insurer at the following address:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured Finance
(IPM-SF)(The National Collegiate Trust 1997-S2,
Collateralized Student Loan
Bonds, Series 1997-S2)
Telecopy No.: (914) 765-3810
Confirmation: (914) 765-3781
(c) Wherever notice is required to be given to the Rating Agencies,
such notice shall be
given or furnished to, or filed with:
(i) Moody's Investors Service, Inc.
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99 Church Street
New York, New York 10004
Attention:
(ii) Fitch Investors Service, Inc.
One State Street Plaza
New York, New York 10004
Attention:
SECTION 13.05 Notices And Reports To Bondholders; Waiver Of Notices.
Where this Indenture provides for notice to Bondholders of any event or
the mailing of any report to Bondholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder as
it appears on the Bond Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Bondholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Bondholder
shall affect the sufficiency of such notice or report with respect to other
Bondholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
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 Bondholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the event that, 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 Bondholders 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 Trustee shall be
deemed to be a suf ficient giving of such notice.
SECTION 13.06 Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of TIA, such required
provision shall control.
SECTION 13.07 Effect Of Headings And Table Of Contents.
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The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 13.08 Successors And Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
SECTION 13.09 Separability.
In case any provision in this Indenture or in the Bonds 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 13.10 Benefits Of Indenture.
Nothing in this Indenture or in the Bonds, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or co-trustee appointed hereunder and the
Bondholders, any benefit or any legal or equitable right, remedy or claim under
this Indenture. Notwithstanding the previous sentence, the parties hereto
acknowledge that the Bond Insurer is an express third party beneficiary hereof
entitled to enforce its rights hereunder as if actually a party hereto.
SECTION 13.11 Legal Holidays.
In the event that the date of any Payment Date, Redemption Date or any
other date on which principal of or interest on any Bond is proposed to be paid,
or any date on which mailing of notices by the Trustee to any Person is required
pursuant to any provision of the Indenture, shall not be a Business Day, then
(notwithstanding any other provision of the Bonds or this Indenture) payment or
mailing of such notice 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 or mailed
on the nominal date of any such Payment Date, Redemption Date or other date for
the payment of principal of or interest on any Bond, or mailing of such notice,
as the case may be, and, in the case of payments, no interest shall accrue for
the period from and after any such nominal date, provided such payment is made
in full on such next succeeding Business Day.
SECTION 13.12 Governing Law.
This Indenture and each Bond shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without
regard to its conflicts of law principles.
SECTION 13.13 Counterparts.
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This instrument 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 13.14 Trust Obligation.
No recourse may be taken, directly or indirectly, against (i) the Trust
Company, (ii) the Administrator, (iii) the Trustee, (iv) any incorporator,
subscriber to the capital stock, stockholder, officer or director of the Trust
Company, the Administrator or the Trustee or of any predecessor or successor of
the Trust Company, the Administrator or the Trustee, (v) any Owner Participant,
or (vi) any partner, beneficiary, agent, officer, director, employee, or
successor or assign of any Owner Participant with respect to the Issuer's
obligations with respect to the Bonds or the obligations of the Issuer or the
Trustee under this Indenture or any certificate or other writing delivered in
connection herewith or therewith.
SECTION 13.15 Authority Of The Administrator.
Each of the parties to this Indenture acknowledges that the Issuer and
the Owner Trustee have each appointed the Administrator to act as its agent to
perform the duties and obligations of the Issuer hereunder. Unless otherwise
instructed by the Issuer or the Owner Trustee, copies of all notices, requests,
demands and other documents to be delivered to the Issuer or the Owner Trustee
pursuant to the terms hereof shall be delivered to the Administrator and the
Bond Insurer. Unless otherwise instructed by the Issuer or the Owner Trustee,
all notices, requests, demands and other documents to be executed or delivered,
and any action to be taken, by the Issuer or the Owner Trustee pursuant to the
terms hereof may be executed, delivered and/or taken by the Administrator
pursuant to the Administration Agreement.
SECTION 13.16 No Petition.
Each Bondholder by its acquisition of a Bond shall be deemed to
covenant and agree, that it will not institute against the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law, at
any time other than on a date which is at least one year and one day after the
last date on which any Bond was Outstanding.
SECTION 13.17 Bond Insurer Access To Information, Books And Records.
While the Bond Insurance Policy is in effect, the Trustee will furnish
the Bond Insurer with such information as it may reasonably request, as appears
from the books and records under its custody and control, or as otherwise known
to it. The Trustee will permit the Bond Insurer to have access to and to make
copies of all such books and records at any reasonable time upon prior request.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first
above written.
THE NATIONAL COLLEGIATE TRUST
1997-S2, a trust acting through Delaware
Trust Capital Management, Inc., not in its
individual capacity but solely as Owner
Trustee under a Trust Agreement dated as of
November 1, 1997.
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
---------
FORM OF BONDS
THE NATIONAL COLLEGIATE TRUST 1997-S2
a trust acting through
Delaware Trust Capital Management, Inc.
not in its Individual Capacity but solely
as Owner Trustee
GATESM RECEIVABLE ASSET-BACKED DEBT SECURITIES (GRADSSM)
7.24% COLLATERALIZED STUDENT LOAN BONDS, SERIES 1997-S2
DUE: SEPTEMBER 20, 2014
CLOSING DATE: DECEMBER 3, 1997
THE PRINCIPAL AMOUNT OF THIS BOND IS PAYABLE AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME
MAY
BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND REPRESENTS AN OBLIGATION OF THE ISSUER AND WILL NOT BE INSURED OR
GUARANTEED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY, OR BY ANY EDUCATIONAL
INSTITUTION HAVING ANY INTEREST IN THE ISSUER.
THIS BOND IS ENTITLED TO THE BENEFITS OF A FINANCIAL GUARANTY INSURANCE POLICY
(THE "BOND INSURANCE POLICY") ISSUED BY MBIA INSURANCE CORPORATION (THE "BOND
INSURER") PURSUANT TO WHICH THE BOND INSURER HAS UNCONDITIONALLY GUARANTEED THE
PAYMENT OF INTEREST ON THE BONDS AT THE BOND INTEREST RATE AND PRINCIPAL ON THE
STATED MATURITY OF THE FINAL PRINCIPAL PAYMENT.
THIS BOND IS ONE OF A DULY AUTHORIZED ISSUE OF THE ISSUER'S 7.24% COLLATERALIZED
STUDENT LOAN BONDS, SERIES 1997-S2, DUE SEPTEMBER 20, 2014, WHICH MAY NOT BE
TRANSFERRED EXCEPT UPON COMPLIANCE WITH THE TERMS OF THE WITHIN-REFERENCED
INDENTURE.
[DTC LEGEND]
NO TRANSFER OF A BOND OR ANY INTEREST THEREIN MAY BE MADE TO: (A)(1) ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL
RETIREMENT ACCOUNTS AND ANNUITIES, KEOGH PLANS AND COLLECTIVE INVESTMENT FUNDS
AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED
(EACH, A "PLAN"), THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE
"CODE"), OR (2) ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING
SUCH BOND OR INTEREST THEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF,
AS
<PAGE>
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TRUSTEE OF, OR WITH ASSETS OF SUCH A PLAN, UNLESS THE PROSPECTIVE TRANSFEREE
PROVIDES TO THE TRUSTEE A CERTIFICATION OF FACTS AND AN OPINION OF COUNSEL THAT
ESTABLISH TO THE SATISFACTION OF THE TRUSTEE THAT SUCH TRANSFER WILL NOT RESULT
IN A VIOLATION OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR CAUSE THE
SERVICER OR THE TRUSTEE TO BE DEEMED A FIDUCIARY OF SUCH PLAN OR RESULT IN THE
IMPOSITION OF AN EXCISE TAX UNDER SECTION 4975 OF THE CODE; OR (B) ANY OTHER
PERSON THAT DOES NOT PROVIDE A CERTIFICATION TO THE TRUSTEE THAT (A)(1) AND
(A)(2) DO NOT APPLY.
$___________________ CUSIP #______________
The National Collegiate Trust 1997-S2 (the "Issuer"), a trust duly organized and
existing under the laws of the State of Delaware acting through Delaware Trust
Capital Management, Inc., not in its individual capacity but solely as owner
trustee under a Trust Agreement, dated as of November 1, 1997, as amended and
restated from time to time (herein referred to as the "Owner Trustee"), for
value received, hereby promises to pay to __________________________ or
registered assigns, the principal amount of _________________________________
Dollars in semiannual payments on each March 20 and September 20 (the "Principal
Payment Dates"), commencing March 20, 1998 and ending on or before September 20,
2014 (the "Stated Maturity" of such final payment of principal), and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
each March 20 and September 20 (the "Interest Payment Dates"), commencing on
March 20, 1998, at the rate of 7.24% per annum, in an amount equal to the
interest accrued on the unpaid principal amount of this Bond during the
six-month period (or, for the initial Interest Payment Date, the period
commencing on the Closing Date) ending on the last day preceding each such
Interest Payment Date (each such period, an "Interest Accrual Period"). All
terms used in this Bond that are not defined herein shall have the meanings
assigned to them in the Indenture.
This Bond is one of a duly authorized issue of Bonds designated as The National
Collegiate Trust 1997-S2, 7.24% Collateralized Student Loan Bonds, Series
1997-S2 (herein called the "Bonds"), issued under an Indenture, dated as of
November 1, 1997 (herein called the "Indenture"), between the Issuer and State
Street Bank and Trust Company, as Trustee (the "Trustee", which term includes
any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Issuer, the Owner Trustee, the Trustee and
the Holders of the Bonds and the terms upon which the Bonds are, and are to be,
authenticated and delivered.
On each Payment Date, the Trustee will apply all amounts held in the Collateral
Proceeds Account and the Reserve Fund in excess of the Interest Reserve Amount,
first if such Payment Date is in September, commencing with the Payment Date
occurring on September 20, 1998, to the payment of the Guaranty Fee and the
Surety Fee and the Guaranty Fee Arrearage and the Surety Fee
<PAGE>
-3-
Arrearage (provided that no Insured Payments under the Bond Insurance Policy
shall be used for such payments); SECOND to the Bonds, pro rata, for payment of
accrued interest at the Bond Interest Rate; THIRD, if such Payment Date is the
Stated Maturity, to the Bonds for the payment of any principal amount of the
Bonds; FOURTH, to the payment of Reimbursement Amounts Owing under the
Reimbursement Agreement as same is certified to the Trustee by the Bond Insurer
(provided that no Insured Payments under the Bond Insurance Policy shall be used
for such payments); FIFTH, to the payment of any shortfall in the Interest
Reserve Amount for the related Interest Accrual Period (provided that no Insured
Payments under the Bond Insurance Policy shall be used for such payments);
provided, further, that, if after giving effect to all payments of interest and
principal on the Bonds on such Payment Date, the Interest Reserve Amount equals
or exceeds the Aggregate Current Principal Amount of the Outstanding Bonds, then
the Trustee shall declare all the Bonds to be immediately due and payable by a
notice in writing to the Issuer; SIXTH, to the payment of scheduled fees due the
Trustee pursuant to the Indenture (provided that no Insured Payments under the
Bond Insurance Policy shall be used for such payments); SEVENTH, to the payment
of any unpaid amount due any Accountants pursuant to the Indenture (provided
that no Insured Payments under the Bond Insurance Policy shall be used for such
payments); EIGHTH, to the payment of scheduled fees due the Owner Trustee of the
Issuer pursuant to the Trust Agreement between the Owner Trustee and the Owner
Participants (provided that no Insured Payments under the Bond Insurance Policy
shall be used for such payments); NINTH, to the payment of scheduled fees due
the Administrator pursuant to the Administration Agreement; TENTH, to the Owner
Trustee, for the benefit of the Funding Owners, the amount of any Funding Owner
Payments which as a designated liquidity capital contributions which have been
deposited into the Reserve Account pursuant to Section 3.11 of the Indenture and
which have not been repaid to the Owner Trustee for the benefit of the Funding
Owner; (provided that no Insured Payments under the Bond Insurance Policy shall
be used for such payments); ELEVENTH, on each Principal Payment Date that is not
the Stated Maturity, to the Bonds for the payment, of any unpaid principal
amount of the Bonds; TWELFTH, to the payment of any unpaid amount due the
Trustee pursuant to Section 7.07 of the Indenture; THIRTEENTH, to the payment of
any unpaid amount due the Owner Trustee of the Issuer pursuant to the Trust
Agreement between the Owner Trustee and the Owner Participants) (provided that
no Insured Payments under the Bond Insurance Policy shall be used for such
payments); FOURTEENTH, to the payment of any unpaid amount due the Administrator
(provided that no Insured Payments shall be used for such purpose); FIFTEENTH,
if such Payment Date is not a Principal Payment Date, any remaining amounts in
the Collateral Proceeds Account shall be deposited in the Reserve Fund;
provided, that, Insured Payments under the Bond Insurance Policy will only be
applied to the payment of interest on the Bonds on any Payment Date and
principal on the Bonds on the Stated Maturity; provided, further, that prior to
the first Principal Payment Date, the payments referred to in clauses twelfth,
thirteenth and fourteenth above will only be paid with the Bond Insurer's
consent, which such consent will not unreasonably be withheld.
The principal of, and interest on, this Bond are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided that as long as the
Bonds are registered in the name of the Depository or its nominee and maintained
in book-entry form, the interest on and principal of this Bond shall be payable
to the Depository. In the event that the Bonds are no longer maintained as
Book-Entry Bonds in
<PAGE>
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accordance with the Indenture, the interest on and principal of this Bond shall
be paid by check mailed to the Person entitled thereto at his address as it
appears on the Bond Register, except that the final payment due on maturity or
redemption in full of this Bond shall be made only upon presentation and
surrender of this Bond at the office or agency of the Issuer maintained for such
purpose.
(i) The Bonds shall be redeemable, pro rata, at the option of the Issuer in
part, not to exceed five percent (5%) of the Aggregate Current Principal Amount
of Outstanding Bonds, upon notice to the Trustee by the Issuer at any time
during the 60 day period following the Closing Date and (ii) the Bonds shall be
redeemable at the option of the Issuer at the Redemption Price, in whole when
the Aggregate Current Principal Amount of Bonds is ten percent (10%) or less of
the Aggregate Current Principal Amount of Bonds as of the Closing Date. Notice
of any Issuer Redemption shall be mailed or delivered by the Issuer or by the
Trustee at least fifteen days prior to the date set for such redemption.
Notwithstanding the foregoing the entire unpaid principal amount of the Bonds
shall be due and payable, if not then previously paid, on the Stated Maturity.
If an Event of Default as defined in the Indenture shall occur and be
continuing, the Bonds may become or be declared due and payable in the manner
and with the effect provided in the Indenture. If any such acceleration of
maturity occurs prior to the Stated Maturity of this Bond, the amount payable to
the Holder of this Bond will be equal to the aggregate unpaid principal amount
of this Bond on the date this Bond becomes so due and payable, together with the
accrued interest on such unpaid principal amount to such date. Following the
acceleration of the maturity of the Bonds, all amounts collected as proceeds of
the collateral securing the Bonds or otherwise shall be applied, after the
reimbursement of certain expenses of the Trustee, ratably among all Bonds,
without preference or priority, first to the payment of interest and then to the
payment of principal.
A Bond Owner of a Book-Entry Bond shall be entitled to transfer beneficial
ownership of such Book-Entry Bond only upon compliance with the procedures
established by such Bond Owner's brokerage firm and by the participating firms
acting as such brokerage firm's agent, if any. No Bond Owner shall be entitled
to receive a bond evidencing ownership of his Book-Entry Bond. In the event the
Bonds are no longer maintained as Book-Entry Bonds, the transfer of Bonds shall
be effected as provided for in the Indenture, subject to the limitations therein
set forth.
Prior to the due presentment for registration of transfer of this Bond, the
Issuer, the Trustee, the Bond Insurer and any agent of the Issuer, the Trustee
or the Bond Insurer may treat the Person in whose name this Bond is registered
(i) on any Record Date, for purposes of making payments of interest and
principal (other than a payment in full of all unpaid principal of a Bond), and
(ii) on any date for any other purpose, as the owner hereof, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
<PAGE>
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The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Control Party. The Indenture also
contains provisions permitting the Control Party or Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds at the time Outstanding on behalf of the Holders of all the Bonds, to
waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Control Party or Holder, at the time of the giving
thereof, of this Bond (or any one or more Predecessor Bonds) shall be conclusive
and binding upon such Holder and upon all future Holders of this Bond and of any
Bond issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Bond. The Indenture also permits the Issuer and the Trustee to amend or
waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Bonds issued thereunder.
The Bonds are issuable only in registered form in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Bonds
are exchangeable for a like aggregate initial principal amount of Bonds of
different authorized denominations, as requested by the
Holder surrendering same.
Anything herein to the contrary notwithstanding, neither the Trust Company, any
Owner Partici pant, nor any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns nor any other person
shall be personally liable for, nor shall recourse be had to any of them for the
payment or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Bond or in the Indenture, it
being expressly un derstood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purpose of
binding the respective interests of the Owner Participants and the Owner Trustee
in the assets of the Issuer. The Holder of this Bond by the acceptance hereof
agrees that in the case of an Event of Default under the Indenture, the Holder
shall have no claim resulting against any of the foregoing for any Deficiency
Amount, loss or claim resulting therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse and enforcement solely
against the Trust Estate and the Issuer for any and all liabilities, obligations
and undertakings contained in the Indenture or in this Bond.
The Owner Trustee has executed this Bond on behalf of the Issuer not in its
individual capacity but solely as owner trustee under the Trust Agreement and
the Owner Trustee shall be liable hereunder only in respect of the assets of the
trust created by such Trust Agreement.
The remedies of the Holder hereof as provided herein, or in the Indenture, shall
be cumulative and concurrent and may be pursued solely against the assets of the
Issuer. No failure on the part of Holder in exercising any right or remedy
hereunder shall operate as waiver or release thereof, nor shall any single or
partial exercise of any such right or remedy preclude any other further exercise
thereof or the exercise of any other right or remedy hereunder.
<PAGE>
-6-
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
No reference herein to the Indenture and no provision of this Bond or of the
Indenture shall alter or impair the obligation of the Issuer, which is absolute
and unconditional to the extent permitted by applicable law, to pay the
principal of, and interest on, this Bond at the times, place and rate, and in
the coin or currency, herein prescribed.
Reference is made to the further provisions of this Bond set forth on the
reverse hereto, which shall have the same effect as though fully set forth on
the face of this Bond.
Unless the certificate of authentication hereon has been executed by the Trustee
by manual signature, this Bond shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.
<PAGE>
-7-
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Bond Insurer"), in consideration of
the payment of the premium and subject to the terms of the Financial Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and irrevocably
guarantees to any Bondholder (as defined below) that an amount equal to each
full and complete Insured Payment (as defined below) will be received by State
Street Bank and Trust Company, or its successor, as trustee for the Bondholders
(the "Indenture Trustee"), on behalf of the Bondholders from the Bond Insurer,
for distribution by the Indenture Trustee to each Bondholder in accordance with
the terms of the Indenture. The Bond Insurer's obligations under the Policy with
respect to a particular Insured Payment shall be discharged to the extent funds
equal to the applicable Insured Payment are received by the Indenture Trustee,
whether or not such funds are properly applied by the Indenture Trustee. Insured
Payments shall be made only at the time set forth in the Policy and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Bonds (including without limitation, an optional redemption).
Notwithstanding the foregoing paragraph, the Policy does not cover (i)
optional or mandatory redemptions, unless such acceleration is at the sole
option of the Bond Insurer, (ii) any payments to be made on an accelerated
basis, unless such acceleration is at the sole option of the Bond Insurer; or
(iii) shortfalls, if any, attributable to the liability of the Trust or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability) or any preference relating to such
items in (i), (ii) and (iii) above.
The Bond Insurer will pay any Insured Payment that is a Preference
Amount (as described below) on the Business Day following receipt on a Business
Day by the Fiscal Agent (as defined below) of (i) a certified copy of the order
requiring the return of such preference payment, (ii) an opinion of counsel
satisfactory to the Bond Insurer that such order is final and not subject to
appeal, (iii) an assignment in such form as is reasonably required by the Bond
Insurer, irrevocably assigning to the Bond Insurer all rights and claims to each
Bondholder relating to or arising under the Bonds against the debtor which made
such preference payment or otherwise with respect to such preference payment and
(iv) appropriate instruments to effect the appointment of the Bond Insurer as
agent for such Bondholder in any legal proceeding related to such preference
payment, such instruments being in a form satisfactory to the Bond Insurer,
provided that if such documents are received after 12:00 noon New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Bondholder and not to any Bondholder directly unless such
Bondholder has returned principal or interest paid on the Bonds to such receiver
or trustee in bankruptcy, in which case such payment shall be disbursed to such
Bondholder.
The Bond Insurer will pay any other amount payable under the Policy no
later than 12:00 noon New York City time on the later of the Payment Date on
which the related Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A., as Fiscal Agent for the Bond
<PAGE>
-8-
Insurer or any successor fiscal agent appointed by the Bond Insurer (the "Fiscal
Agent"), of a Notice of Non-Payment (as described below); provided that if such
Notice of Non-Payment is received after 12:00 noon New York City time on such
Business Day, it will be deemed to be received on the following Business Day. If
any such Notice of Non-Payment received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim under the
Policy, it shall be deemed not to have been received by the Fiscal Agent for
purposes of this paragraph, and the Bond Insurer or the Fiscal Agent, as the
case may be, shall promptly so advise the Indenture Trustee and the Indenture
Trustee may submit an amended Notice of Non-Payment.
Insured Payments due under the Policy unless otherwise stated therein
will be disbursed by the Fiscal Agent to the Indenture Trustee on behalf of the
Bondholders by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Indenture Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Bond Insurer only and the Fiscal
Agent shall in no event be liable to Bondholders for any acts of the Fiscal
Agent or any failure of the Bond Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
Subject to the terms of the Indenture, the Bond Insurer shall be
subrogated to the rights of each Bondholder to receive payments under the Bonds
to the extent of any payment by the Bond Insurer under the Policy.
As used in the Policy, the following terms shall have the following
meanings:
"Bondholder" means each Bondholder (as defined in the Indenture and
other than the Trust, the Indenture Trustee, the Administrator, the Depositor,
the Owner Participants or the Servicer) who, on the applicable Payment Date, is
entitled under the terms of the related Bond to distribution thereunder.
"Bonds" means the Bonds issued pursuant to the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or day on
which the Bond Insurer or banking institutions in New York City or in the city
in which the corporate trust office of the Indenture Trustee under the Indenture
is located are authorized or obligated by law or executive order to close.
"Deficiency Amount" means (a) for any Payment Date, any shortfall in
the aggregate amount available in the Collateral Proceeds Account, the Reserve
Fund, any Funding Owner Payments or any other amounts available under the
Indenture to pay the interest due and payable on the Bonds on such Payment Date,
and (b) on the Stated Maturity, any shortfall in the aggregate amount available
in the Collateral Proceeds Account, the Reserve Fund,
<PAGE>
-9-
any Funding Owner Payments or any other amounts available under the Indenture to
pay the outstanding principal on the Bonds (at the Stated Maturity) as such
payments shall become due but shall not be so paid (except that in the event of
any acceleration of the due date of such principal by reason of optional
redemption or acceleration resulting from default or otherwise, the payments
guaranteed by the Policy shall be made in such amounts and at such times as such
payments of principal would have been due had there not been any such
acceleration).
"Indenture" means the Indenture dated as of November 1, 1997 by and
between the Trust and the Indenture Trustee, without regard to any amendment or
supplement thereto, unless such amendment or supplement has been approved in
writing by the Bond insurer.
"Insured Payment" means (i) as of any Payment Date, any Deficiency
Amount and (ii) any Preference Amount.
"Notice of Non-Payment" means the telephonic or telegraphic notice,
promptly confirmed in writing by fax substantially in the form of Exhibit A
attached hereto, the original of which is subsequently delivered by registered
or certified mail, from the Indenture Trustee specifying the Insured Payment
which shall be due and owing on the applicable Payment Date.
"Preference Amount" means any amount previously distributed to a
Bondholder in respect of the Bonds that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (l l U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
"Trust" means The National Collegiate Trust 1997-S2.
Capitalized terms used in the Policy and not otherwise defined therein
shall have the respective meanings set forth in the Indenture as of the date of
execution of the Policy, without giving effect to any subsequent amendment or
modification to the Indenture unless such amendment or modification has been
approved in writing by the Bond Insurer.
Any notice under the Policy or service of process on the Fiscal Agent
may be made at the address listed below for the Fiscal Agent or such other
address as the Bond Insurer shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
<PAGE>
-10-
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York without giving effect to the
conduct of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the Policy
is not refundable for any reason including payment, or provision being made for
payment, prior to maturity of the Bonds.
MBIA INSURANCE CORPORATION
<PAGE>
IN WITNESS WHEREOF, the Issuer has executed this instrument through Delaware
Trust Capital Management, Inc., not in its individual capacity, but solely as
Owner Trustee under the Trust
Agreement.
Dated: _______________, 1997 THE NATIONAL COLLEGIATE TRUST 1997-S2,
a trust acting through Delaware Trust
Capital Management, Inc., not in its
individual capacity but solely as
owner trustee under the Trust
Agreement dated as of
November 1, 1997
By
-----------------------------
[Title]
Attest:
- --------------------------
[Title]
This is one of the Bonds referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By
-------------------------------------
Authorized Signatory
<PAGE>
FOR VALUE RECEIVED, __________________________ hereby sells, assigns and
transfers unto ______________________________ the within Bond of The National
Collegiate Trust 1997- S2 standing in the name(s) of the undersigned in the Bond
Register of the Issuer with respect to such Bond and does hereby irrevocably
constitute and appoint ________________ Attorney to transfer such Bond in such
Bond Register, with full power of substitution in the premises.
Please insert Social Security
or other identifying number of
assignee:_____________________
Dated: ___________________________________________________
[Signature]
- ----------------------------
[Signature]
Signature Guarantee: Notice: The signature(s) to this assignment
must correspond with the name(s) as written
upon the face of this Bond in every
- ----------------------- particular without alteration or any change
Authorized Officer whatsoever. The signature(s) must be
guaranteed by a commercial bank or trust
company located, or having a correspondent
- ----------------------- located, in the City of New York or the city
Name of Institution in which the Corporate Trust Office is
located, or by a member firm of a national
securities exchange. Notarized or witnessed
signatures are not acceptable as guaranteed
signatures.
<PAGE>
EXHIBIT B
SERVICING AGREEMENT
<PAGE>
EXHIBIT C
CUSTODIAL AGREEMENT
<PAGE>
EXHIBIT D
ADMINISTRATION AGREEMENT
<PAGE>
EXHIBIT E
DTC LETTER AGREEMENT
<PAGE>
SCHEDULE I
Schedule of Student Loans
<PAGE>
SCHEDULE II
Calculation of Servicing Fee
The Servicer will be entitled to a monthly fee for its services (the
"Servicing Fee") in an amount based upon the aggregate principal balance of the
Student Loans serviced at the end of each month, multiplied by the applicable
Servicing Fee divided by twelve, equal to the
following:
TIME PERIOD SERVICING FEE
Through September 2000 0.46%
October 2000 through September 2005 0.66%
October 2005 through September 2009 0.86%
October 2009 through September 2013 1.00%
EXHIBIT 10.1
<PAGE>
================================================================================
ADMINISTRATION AGREEMENT
among
THE NATIONAL COLLEGIATE TRUST 1997-S2,
as Issuer
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
as Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
as Indenture Trustee
and
FIRST MARBLEHEAD DATA SERVICES INC.,
as Administrator
Dated as of November 1, 1997
================================================================================
<PAGE>
This ADMINISTRATION AGREEMENT dated as of November 1, 1997 (as
amended from time to time, the "Agreement"), among THE NATIONAL COLLEGIATE TRUST
1997-S2, a Delaware business trust (the "Issuer"), DELAWARE TRUST CAPITAL
MANAGEMENT, INC., a Delaware trust company, not in its individual capacity but
solely as Owner Trustee (the "Owner Trustee"), STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company (the "Indenture Trustee"), and FIRST
MARBLEHEAD DATA SERVICES INC., a Delaware corporation (the "Administrator"),
W I T N E S S E T H :
WHEREAS, the Issuer is issuing its 7.24% Collateralized
Student Loan Bonds, Series 1997-S2 (the "Bonds") pursuant to the Indenture dated
as of November 1, 1997 (the "Indenture"), between the Issuer and the Indenture
Trustee and (b) its Trust Certificates pursuant to the Trust Agreement dated as
of November 1, 1997 (the "Trust Agreement") between the Owner Trustee and The
National Collegiate Trust (together with its successors in interest, the
"Owners"). Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the Trust Agreement or Indenture (the
"Basic Documents");
WHEREAS, pursuant to the Basic Documents, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (a) the
Student Loan Notes and other collateral pledged pursuant to the Indenture (the
"Collateral") and (b) the Bonds (the registered holders of which are being
referred to herein as the "Bondholders");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer referred to in the
Basic Documents and any other documents signed by the Owner Trustee on behalf of
the Issuer (collectively, the "Trust Related Agreements") and to provide such
additional services consistent with the terms of this Agreement and the Trust
Related Agreements as the Issuer and the Owner Trustee may from time to time
request; and
WHEREAS, the Administrator has the capacity to provide the
services required hereby and is willing to perform such services for the Issuer
and the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Duties Of The Administrator.
(a) Duties With Respect To The Trust Related Agreements.
<PAGE>
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer under the Trust Related Agreements.
In addition, the Administrator shall consult with the Owner Trustee regarding
the duties of the Issuer under the Trust Related Agreements. The Administrator
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Trust
Related Agreements. The Administrator shall prepare for execution by the Issuer,
or shall cause the preparation by other appropriate persons or entities of, all
such documents, reports, filings, instruments, certificates and opinions that it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Trust Related Agreements. In furtherance of the foregoing, the Administrator
shall take all appropriate action that is the duty of the Issuer to take
pursuant to the Indenture including, without limitation, such of the foregoing
as are required with respect to the following matters under the Indenture
(references are to sections of the Indenture):
(A) the direction to the Indenture Trustee by Issuer Order
to deposit moneys with Paying Agents, if any, other than the
Indenture Trustee (Section 9.02);
(B) the administration of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation
of an Officer's Certificate and the obtaining of the Opinion of
Counsel relating thereto (Section 5.01);
(C) the preparation and delivery of notice to Bondholders of
the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 7.10);
(D) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable
state agencies and the transmission of such summaries, as
necessary, to the Bondholders (Section 8.04);
(E) the preparation of an Issuer Order and Officer's
Certificate and the obtaining of an Opinion of Counsel, if
necessary, for the release of property of the Trust Estate
(Sections 4.05 and 4.06);
(F) the preparation of Issuer Requests and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Bondholders of notices with
respect to such supplemental indentures (Sections 10.01 and
10.02);
(G) the execution and delivery of new Bonds conforming to
any supplemental indenture (Section 10.06);
2
<PAGE>
(H) the preparation and delivery of Issuer Order and
Officer's Certificates and providing an Opinion of Counsel, if
necessary, for the release of property from the lien of the
Indenture (Sections 4.04, 4.06 and 4.07);
(I) the payment of all expenses in connection with the
issuance of the Bonds (Section 7.07);
(J) the redemption of the Bonds and the related notice to
the Indenture Trustee (Sections 11.01 and 11.02);
(K) the furnishing of names and addresses of the Bondholders
to the Indenture Trustee (Section 8.01); and
(L) the pursuit of all remedies necessary to obtain Funding
Owner Payments (as defined in the Indenture) from Funding Owners
(as defined in the Indenture) who have failed to pay when due
under the Trust Agreement.
(ii) the Administrator will:
(A) indemnify the Indenture Trustee and its agents
for, and hold them harmless against, any losses, liability or
expense, including reasonable attorneys fees and expenses,
incurred without willful misconduct, negligence, or bad faith
on their part, arising out of the willful misconduct,
negligence or bad faith of the Administrator in the
performance of the transactions contemplated by this
Agreement; and
(B) indemnify the Issuer and the Owner Trustee and
their respective agents for, and hold them harmless against,
any losses, liability or expense, including reasonable
attorneys fees and expenses, incurred without negligence,
willful misconduct or bad faith on their part, arising out of
the willful misconduct, negligence or bad faith of the
Administrator in the performance of the transactions
contemplated by this Agreement;
provided, however, that the Administrator shall not be required to indemnify
either the Indenture Trustee, the Issuer or the Owner Trustee pursuant to
Subsection (ii)(A) or (B) so long as the Administrator has acted pursuant to the
instructions of the Owner Trustee or the Owners in accordance with Subsection
(c) of Section 1 of this Agreement.
(b) Additional Duties. (i) In addition to the duties of the
Administrator set forth above, the Administrator shall perform, or cause to be
performed, its duties and obligations and the duties and obligations of the
Owner Trustee on behalf of the Issuer under the Trust Agreement including,
without limitation, those duties and obligations set forth on Schedule A hereto.
In furtherance thereof, the Issuer shall execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to the
terms hereof, one or more powers of attorney substantially in the form of
Exhibit A hereto, appointing the Administrator the attorney-in-fact of
3
<PAGE>
the Issuer for the purpose of executing on behalf of the Issuer all such
documents, reports, filings, instruments, certificates and opinions. Subject to
Section 4 of this Agreement, and in accordance with the directions of the Issuer
and the Owner Trustee, the Administrator shall administer, perform or supervise
the performance of such other activities in connection with the Collateral
(including the Trust Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Administrator. The
Administrator shall be responsible for any filings required by the Issuer under
the Securities Exchange Act of 1934, as amended.
(ii) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its affiliates; PROVIDED, HOWEVER,
that the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Administrator's
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
(iii) In carrying out any of its obligations under this
Agreement, the Administrator may act either directly or through agents,
attorneys, accountants, independent contractors and auditors and enter into
agreements with any of them.
(c) Non-ministerial Matters.
(i) With respect to matters that in the reasonable
judgment of the Administrator are non-ministerial, the Administrator shall not
be under any obligation to take any action, and in any event shall not take any
action unless the Administrator shall have received instructions from the Owner
Trustee or the Owners in accordance with the Trust Agreement. For the purpose of
the preceding sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of or any supplement to the Trust
Related Agreements;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought
by or against the Issuer;
(C) the appointment of successor Administrators and
successor Indenture Trustees pursuant to the Indenture, or
the consent to the assignment by the Administrator or
Indenture Trustee of its obligations under the Indenture;
and
(D) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not (x) make
any payments to the Bondholders under the Trust Related Agreements, (y) sell the
Trust Estate pursuant to the Indenture or (z) take any action that the Issuer
directs the Administrator not to take on its behalf.
4
<PAGE>
(d) Actions On Behalf Of The Owners. Pursuant to Section 4.06
of the Trust Agreement, each Owner has appointed the Administrator as its true
and lawful attorney-in-fact with respect to certain matters described in such
Section 4.06.
2. Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer, the
Indenture Trustee and the Owners at any time during normal business hours.
3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to an
Administration Fee equal to (i) on each Payment Date, .075% of the outstanding
principal balance of the Bonds as of the immediately preceding Payment Date plus
(ii) on each Distribution Date after the Bonds have been retired, 5% of the Net
Cash Flow to be distributed to the Owners on such Distribution Date, determined
in accordance with the Trust Agreement, which in each case shall be solely an
obligation of the Issuer.
4. Additional Information To Be Furnished To The Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. Independence Of The Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer, the Owner Trustee
or any Owner as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
7. Other Activities Of The Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
8. Term Of Agreement; Resignation And Removal Of
Administrator. (a) This Agreement shall continue in force until the dissolution
of the Issuer, upon which event this Agreement shall automatically terminate.
5
<PAGE>
(b) Subject to Section 8(e) of this Agreement, the
Administrator may resign its duties hereunder by providing the Issuer and the
Bond Insurer with at least 60 days' prior written notice.
(c) Subject to Section 8(e) of this Agreement, the Issuer with
the Bond Insurer's consent, may remove the Administrator without cause by
providing the Administrator with at least 60 days' prior written notice.
(d) Subject to Section 8(e) of this Agreement, at the sole
option of the Issuer with the Bond Insurer's consent, the Administrator may be
removed immediately upon written notice of termination from the Issuer to the
Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of
any of its duties under this Agreement and, after notice of such default, shall
not cure such default within ten days (or, if such default cannot be cured in
such time, shall not give within ten days such assurance of cure as shall be
reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official for the Administrator or any substantial part of its property, shall
consent to the taking of possession by any such official of any substantial part
of its property, shall make any general assignment for the benefit of creditors
or shall fail generally to pay its debts as they become due;
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section shall occur, it shall give written notice thereof
to the Owner Trustee, the Bond Insurer and the Indenture Trustee within seven
days after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer (with the consent of the Owner Trustee and the Bond
Insurer) and (ii) such successor Administrator shall have agreed in writing to
be bound by the terms of this Agreement in the same manner as the Administrator
is bound hereunder.
(f) The appointment of any successor Administrator shall be
effective only after the Rating Agency, after having been given 10 days' prior
notice of such proposed appointment,
6
<PAGE>
shall have declared in writing that such appointment will not result in a
reduction or withdrawal of the then current rating of the Bonds.
9. Action Upon Termination, Resignation Or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to Section
8(a) of this Agreement or the resignation or removal of the Administrator
pursuant to Section 8(b) or (c) of this Agreement, respectively, the
Administrator shall be entitled to be paid all fees and reimbursable expenses
accruing to it to the date of such termination, resignation or removal. The
Administrator shall forthwith upon such termination pursuant to Section 8(a) of
this Agreement deliver to the Issuer all property and documents of or relating
to the Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 8(b) or (c) of
this Agreement, respectively, the Administrator shall cooperate with the Issuer
and take all reasonable steps requested to assist the Issuer in making an
orderly transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows: (a) If to the Issuer,
to:
The National Collegiate Trust 1997-S2
c/o Delaware Trust Capital Management, Inc.
900 Market Street, 2nd Floor
Wilmington, DE 19801
Attention: Mr. Richard N. Smith
Corporate Trust
(b) If to the Administrator, to:
First Marblehead Data Services Inc.
237 Park Avenue
New York, NY 10017
Attention: Mr. Stephen Anbinder
(c) If to the Indenture Trustee, to:
State Street Bank and Trust Company
Corporate Trust Department
225 Franklin Street
Boston, MA 02110
Attention: Ms. Patricia DiCarlo
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(d) If to the Owner Trustee, to:
Delaware Trust Capital Management, Inc.
900 Market Street, 2nd Floor
Wilmington, DE 19801
Attention: Mr. Richard N. Smith
Corporate Trust
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(e) If to the Bond Insurer, to:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Deborah Silverman
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
11. Amendments. (a) This Agreement may be amended from time to
time by the parties hereto as specified in this Section, provided that any
amendment be accompanied by the written consent of the Owner Trustee and the
Bond Insurer, and an Opinion of Counsel to the Indenture Trustee to the effect
that such amendment complies with the provisions of this Section.
(b) If the purpose of the amendment (as detailed therein) is
to correct any mistake, eliminate any inconsistency, cure any ambiguity or deal
with any matter not covered (i.e., to give effect to the intent of the parties
and, if applicable, to the expectations of the Bondholders), it shall not be
necessary to obtain the consent of any Bondholder, but the Indenture Trustee
shall be furnished with a letter from the Rating Agency that the amendment will
not result in the downgrading or withdrawal of the rating then assigned to the
Bonds.
(c) If the purpose of the amendment is to prevent the
imposition of any federal or state taxes at any time that the Bonds are
outstanding (i.e., technical in nature), it shall not be necessary to obtain the
consent of any Bondholder, but the Indenture Trustee shall be furnished with an
Opinion of Counsel from counsel to the Issuer that such amendment is necessary
or helpful to prevent the imposition of such taxes and is not materially adverse
to any Bondholder.
(d) If the purpose of the amendment is to add or eliminate or
change any provision of the Agreement other than as contemplated in (b) and (c)
above, the amendment shall require the consent of the Rating Agency and the Bond
Insurer; PROVIDED, HOWEVER, that no such amendment shall reduce in any manner
the amount of, or delay the timing of, payments received that are required to be
distributed on the Bonds without the consent of the related Bondholder, as
applicable.
(e) It shall not be necessary for the consent of the Rating
Agency to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
12. Successors And Assigns. This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer, the
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Owner Trustee and the Bond Insurer and the Indenture Trustee and unless the
Rating Agency, after having been given 10 days' prior notice of such assignment,
shall have declared in writing that such assignment will not result in a
reduction or withdrawal of the then current rating of the Bonds. An assignment
with such consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; PROVIDED that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any such permitted successors or assigns of the parties
hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall together constitute but one
and the same agreement.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Limitation Of Liability Of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been executed by
Delaware Trust Capital Management, Inc., not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer, and in no event shall
Delaware Trust Capital Management, Inc. in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VIII, IX and X of the
Trust Agreement.
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18. Third Party Beneficiary. The Parties hereto acknowledge
that the Bond Insurer is an express third party beneficiary hereof entitled to
enforce its rights hereunder as if actually a party hereto..
* * * * * * * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
THE NATIONAL COLLEGIATE TRUST 1997-S2
By: DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity but solely as
Owner Trustee
By:
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee
By:
---------------------------------
Name:
Title:
FIRST MARBLEHEAD DATA SERVICES INC.
By:
---------------------------------
Name:
Title:
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EXHIBIT A
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that The National Collegiate Trust
1997-S2 (the "Issuer"), does hereby make, constitute and appoint First
Marblehead Data Services Inc., as administrator under the Administration
Agreement dated as of November 1, 1997 (the "Administration Agreement"), among
the Issuer, State Street Bank and Trust Company, as Indenture Trustee, and First
Marblehead Data Services Inc., as Administrator, as the same may be amended from
time to time, and its agents and attorneys, as Attorneys-in-Fact to execute on
behalf of the Issuer all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Trust Related Agreements, including, without
limitation, to appear for and represent the Issuer in connection with the
preparation, filing and audit of federal, state and local tax returns pertaining
to the Issuer, and with full power to perform any and all acts associated with
such returns and audits that the Issuer could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restrictions on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by the
Issuer are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall have the
meanings ascribed thereto in the Administration Agreement.
EXECUTED this ___ day of ________, 1997.
THE NATIONAL COLLEGIATE TRUST 1997-S2
By: DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
Duties Of The Issuer
Performed By The Administrator Under The Trust Agreement
(A) Filing tax returns, reports and forms under Section 8.03.
(B) Furnishing documents to the Owners under Section 9.02.
(C) Filing a Certificate of Termination of the Trust upon termination
pursuant to Section 11.01.
(D) Appointing separate trustees under Section 12.02.
(E) Obtaining execution by the Owners of any amendment to the Trust
Agreement thereunder.
Duties Of The Administrator Under The Trust Agreement
Interpreting and applying the provisions set forth in Article VII
regarding allocations of Profit and Loss and Distributions of Net Cash
Flow, resolving any ambiguities that may result from such application
and providing the Owners with clarification of any provisions.
