EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
KEY BANK USA, NATIONAL ASSOCIATION,
as Master Servicer, Seller and Administrator
KEYCORP STUDENT LOAN TRUST 2001-A,
as Issuer
KEY CONSUMER RECEIVABLES LLC,
as Depositor
BANK ONE, NATIONAL ASSOCIATION,
as Eligible Lender Trustee
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
INSURANCE AGREEMENT
$450,000,000
KeyCorp Student Loan Trust 2001-A
Floating Rate Asset-Backed Notes
Class II-A-1 and II-A-2
Dated as of September 1, 2001
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS 1
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representation and Warranties of the Issuer,
the Master Servicer, the Seller, the
Administrator and the Depositor.............................6
Section 2.02. Affirmative Covenants of the Issuer, the
Master Servicer, the Seller, the
Administrator and the Depositor............................10
Section 2.03. Negative Covenants of the Issuer, the Master
Servicer, the Seller, the
Administrator and the Depositor...........................14
Section 2.04. Representations, Warranties and Covenants
of Eligible Lender Trustee.................................15
Section 2.05. Representations, Warranties and
Covenants of Indenture Trustee............................17
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy.......................................18
Section 3.02. Payment of Fees and Premium..................................20
Section 3.03. Reimbursement and Additional Payment Obligation..............20
Section 3.04. Indemnification; Limitation of Liability.....................23
Section 3.05. Payment Procedure............................................25
Section 3.06. Indemnification of the Indenture Trustee;
Limitation of Liability....................................25
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement..............26
Section 4.02. Further Assurances and Corrective Instruments................27
Section 4.03. Obligations Absolute.........................................27
Section 4.04. Assignments; Reinsurance; Third-party Rights.................28
Section 4.05. Liability of the Insurer.....................................29
Section 4.06. Parties Will Not Institute Insolvency Proceedings............30
Section 4.07. Eligible Lender Trustee, Indenture Trustee,
Depositor, Administrator, Seller,
Issuer and Master Servicer To Join in
Enforcement Action.........................................30
Section 4.08. Subrogation..................................................30
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults.....................................................30
Section 5.02. Remedies; No Remedy Exclusive................................31
Section 5.03. Waivers......................................................32
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc..............................................32
Section 6.02. Notices......................................................33
Section 6.03. Severability.................................................34
Section 6.04. Governing Law................................................35
Section 6.05. Consent to Jurisdiction......................................35
Section 6.06. Consent of the Insurer.......................................35
Section 6.07. Counterparts.................................................35
Section 6.08. Headings.....................................................35
Section 6.09. Trial by Jury Waived.........................................36
Section 6.10. Limited Liability............................................36
Section 6.11. Entire Agreement.............................................36
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT (this "Insurance Agreement") dated as of
September 1, 2001 by and among KEY BANK USA, NATIONAL ASSOCIATION ("Key Bank"),
in its capacity as the Seller (together with its permitted successors and
assigns, the "Seller"), KEY BANK, in its capacity as Master Servicer (together
with its permitted successors and assigns, the "Master Servicer"), KEY BANK, in
its capacity as Administrator (together with its permitted successors and
assigns, the "Administrator"), KEY CONSUMER RECEIVABLES LLC, as the Depositor
(together with its permitted successors and assigns, the "Depositor"), KEYCORP
STUDENT LOAN TRUST 2001-A, as Issuer (the "Issuer"), MBIA INSURANCE CORPORATION,
in its capacity as Insurer (the "Insurer"), BANK ONE, NATIONAL ASSOCIATION, in
its capacity as Eligible Lender Trustee (the "Eligible Lender Trustee"), and THE
CHASE MANHATTAN BANK, in its capacity as Indenture Trustee (the "Indenture
Trustee").
WHEREAS, the Indenture dated as of September 1, 2001 (the
"Indenture"), between the Issuer and the Indenture Trustee relating to the
$450,000,000 KeyCorp Student Loan Trust 2001-A, Floating Rate Asset Backed
Notes, Class II-A-1 and II-A-2 (the "Securities"), provides for, among other
things, the issuance of student loan asset-backed notes, and the Insurer has
issued its note guaranty insurance policy (the "Policy") that guarantees certain
payments due from the Issuer on the Securities; and
WHEREAS, the Insurer shall be paid an insurance premium pursuant to
the Indenture, and the details of such premium are set forth herein; and
WHEREAS, the Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor have undertaken certain obligations in
consideration for the Insurer's issuance of the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Insurance Agreement shall have the meanings
provided herein for all purposes of this Insurance Agreement, unless the context
clearly requires otherwise, in both singular and plural form, as appropriate.
Unless the context clearly requires otherwise, all capitalized terms used herein
and not otherwise defined in this Insurance Agreement shall have the meanings
assigned to them in the Indenture or the Sale and Servicing Agreement. All words
used herein shall be construed to be of such gender or number as the
circumstances require. This "Insurance Agreement" shall mean this Insurance
Agreement as a whole and as the same may, from time to time hereafter, be
amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Insurance Agreement as a whole and not to any particular paragraph, clause
or other subdivision hereof, unless otherwise specifically noted.
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of September 1, 2001 among the Issuer, the Administrator and the Indenture
Trustee.
"ASSIGNED AGREEMENTS" shall have the meaning assigned to such term in
the Indenture.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday
(ii) a day on which the Insurer is closed or a day on which 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.
"CAP AGREEMENT" shall have the meaning assigned to such term in the
Indenture.
"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMITMENT" means the letter of commitment from the Insurer to the
Seller dated August 31, 2001.
"COORDINATION AGREEMENTS" shall have the meaning assigned to such term
in the Indenture.
"DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.
"DEFAULT" means any event that results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"DELAWARE TRUSTEE" means Bank One Delaware, Inc., as Delaware trustee
under the Trust Agreement, and any successor to the Delaware Trustee under the
Trust Agreement.
"ELIGIBLE LENDER TRUSTEE" means Bank One, National Association, a
national banking association, as eligible lender trustee under the Trust
Agreement, and any successor to the Eligible Lender Trustee under the Trust
Agreement.
"EVENT OF DEFAULT" means any event of default specified in Section
5.01 hereof.
"FINANCIAL STATEMENTS" means, with respect to the Master Servicer and
the Seller, the quarterly call reports filed with the OCC.
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"FITCH" means Fitch, Inc., and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "Fitch" shall be deemed to refer to any other nationally
recognized rating agency designated by the Insurer.
"GUARANTEE AGREEMENTS" shall have the meaning assigned to such term in
the Indenture.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of September 6, 2001 between the Insurer, the Seller, and the Underwriters,
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.
"INDENTURE" means the Indenture dated as of September 1, 2001 between
the Issuer and the Indenture Trustee as the same may be amended or supplemented
from time to time in accordance with the terms thereof.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, a New York banking
corporation, as indenture trustee under the Indenture, and any successor to the
Indenture Trustee under the Indenture.
"INTEREST RATE SWAP" shall have the meaning assigned to such term in
the Indenture.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"LATE PAYMENT RATE" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days, calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"LIABILITIES" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
"LOSSES" means (a) any actual out-of-pocket loss paid by the Insurer
or its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term is
used in the Securities Act) of any of the foregoing, and (b) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"KBUSA STUDENT LOAN TRANSFER AGREEMENT" means the KBUSA Student Loan
Transfer Agreement dated as of September 1, 2001 between the Seller, as seller,
the Depositor, as purchaser and Bank One, National Association, as eligible
lender trustee for the Depositor.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (a) the business, financial condition, results of operations
or properties of such Person or (b) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"MOODY'S" means Xxxxx'x Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Insurer.
"OBLIGOR" means the original obligor or obligors under each Student
Loan, and any Person who owes payments in respect of such Student Loan,
including any guarantor of such obligor and their respective successors.
"OFFERING DOCUMENT" means the Prospectus dated August 31, 2001 and the
Prospectus Supplement thereto dated September 6, 2001, of the Depositor in
respect of the Securities (and any amendment or supplement thereto) and any
other offering document in respect of the Securities prepared by the Issuer, the
Master Servicer, the Seller or the Depositor that makes reference to the Policy.
"OPINION FACTS AND ASSUMPTIONS" means the facts and assumptions
contained in the FDIC opinion and the insolvency opinions each dated September
14, 2001 by Xxxxxxxx Xxxx LLP insofar as they relate to QSPE, the Seller and the
Depositor.
"OWNERS" means registered holders of Securities.
"PERSON" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
limited liability company, partnership or other organization or entity (whether
governmental or private).
"PREMIUM" means the premium payable in accordance with Section 3.02
hereof.
"PREMIUM PERCENTAGE" shall mean the per annum premium rate set forth
in paragraph 1 of the Commitment.
"QSPE" means Key Consumer QSPE LLC.
"QSPE STUDENT LOAN TRANSFER AGREEMENT" means the QSPE Student Loan
Transfer Agreement dated as of September 1, 2001 between QSPE, as seller,
Depositor, as purchaser, Bank One, National Association, as eligible lender
trustee for QSPE, and Bank One, National Association, as eligible lender trustee
for the Depositor.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of September 1, 2001 by and among the Issuer, the Seller, the Master
Servicer, the Eligible Lender Trustee, the Depositor and the Administrator.
"SECURITIES" means the $450,000,000 KeyCorp Student Loan Trust 2001-A,
Floating Rate Asset Backed Notes, Class II-A-1 and II-A-2 .
"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"STUDENT LOANS" shall have the meaning assigned to the term "Financed
Student Loan" in the Indenture.
"STUDENT LOAN TRANSFER AGREEMENTS" means the KBUSA Student Loan
Transfer Agreement and the QSPE Student Loan Transfer Agreement.
"SUB-SERVICER" means, collectively, Pennsylvania Higher Education
Assistance Agency and the Great Lakes Educational Loan Services, Inc. and any
substitute or additional sub-servicers appointed pursuant to the terms of the
Sale and Servicing Agreement.
"SUB-SERVICING AGREEMENTS" means, collectively, the Sub-Servicing
Agreements dated as of September 1, 2001 between the Master Servicer and
Pennsylvania Higher Education Assistance Agency, as Sub-Servicer, as the same
may be amended or supplemented from time to time in accordance with the terms
thereof, the Sub-Servicing Agreement dated as of September 1, 2001 between the
Master Servicer and Great Lakes Educational Loan Services, Inc., as
Sub-Servicer, as the same may be amended or supplemented from time to time in
accordance with the terms thereof, and any substitute or additional
sub-servicing agreements entered into by the Master Servicer pursuant to the
terms of the Sale and Servicing Agreement.
"TERM OF THE INSURANCE AGREEMENT" shall be determined as provided in
Section 4.01 hereof.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"TRANSACTION DOCUMENTS" means this Insurance Agreement, the
Commitment, the Student Loan Transfer Agreements, the Sale and Servicing
Agreement, the Trust Agreement, the Indenture, the Offering Document, the
Securities, the Indemnification Agreement, the Sub-Servicing Agreements, the
Underwriting Agreement, the Coordination Agreements, the Assigned Agreements,
the Guarantee Agreements, the Cap Agreement, the Interest Rate Swap and
Administration Agreement.
"TRUST AGREEMENT" means the Trust Agreement among the Depositor, the
Delaware Trustee and the Eligible Lender Trustee dated as of August 20, 2001, as
amended and restated by the Amended and Restated Trust Agreement dated as of
September 1, 2001 (as further amended and supplemented from time to time in
accordance with its terms).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"UNDERWRITERS" means Deutsche Banc Alex. Xxxxx Inc. and McDonald
Investments Inc.
"UNDERWRITING AGREEMENT" means the Note Underwriting Agreement between
the Underwriters and the Seller with respect to the offer and sale of the
Securities, as the same may be amended from time to time.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01 REPRESENTATION AND WARRANTIES OF THE ISSUER, THE MASTER
SERVICER, THE SELLER, THE ADMINISTRATOR AND THE DEPOSITOR. The Issuer, the
Master Servicer, the Seller, the Administrator and the Depositor represent,
warrant and covenant as of the Date of Issuance, each as to those matters
relating to itself, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Master Servicer, the
Seller and the Administrator are each a national banking association duly
organized, validly existing and in good standing under the laws of the
United States of America. The Issuer is a Delaware business trust, duly
organized, validly existing and in good standing under the laws of its
jurisdiction. The Depositor is a Delaware limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction. Each of the Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor is duly qualified to do business, is in
good standing and has obtained all licenses, permits, charters,
registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and as described in the
Offering Document and the performance of its obligations under the
Transaction Documents in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect upon
the Transaction, the Owners or the Insurer.
(b) POWER AND AUTHORITY. Each of the Issuer, the Master Servicer, the
Seller, the Administrator and the Depositor has all necessary power and
authority corporate or otherwise to conduct its business as currently
conducted and, as described in the Offering Document, to execute, deliver
and perform its obligations under the Transaction Documents and to
consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of the
Transaction Documents by the Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor have been duly authorized by all necessary
action, corporate or otherwise, and do not require any additional approvals
or consents of, or other action by or any notice to or filing with, any
Person, including, without limitation, any governmental entity or the
Master Servicer's, the Seller's, the Administrator's or the Depositor's
stockholders or members, as applicable, which have not previously been
obtained or given by the Master Servicer, the Seller, the Administrator or
the Depositor.
(d) NONCONTRAVENTION. None of the execution and delivery of the
Transaction Documents by the Issuer, the Master Servicer, the Seller, the
Administrator or the Depositor, the consummation of the transactions
contemplated thereby or the satisfaction of the terms and conditions of the
Transaction Documents:
(i) conflicts with or results in any breach or violation of any
provision of the articles of association or other organizational
documents of the Master Servicer, the Seller, the Administrator or the
Depositor or any provision of the Trust Agreement or the Issuer's
Certificate of Trust or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor or any of their material
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over the
Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor;
(ii) constitutes a default by the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor is a party or by which any
of its or their respective properties, which are individually or in
the aggregate material to the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor, is or may be bound or affected,
which default or breach would reasonably be expected to result in a
Material Adverse Change with respect to the Issuer, the Master
Servicer, the Seller, the Administrator or the Depositor; or
(iii) results in or requires the creation of any lien upon or in
respect of any assets of the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor, except as contemplated by the
Transaction Documents.
(e) LEGAL PROCEEDINGS. To the Issuer's, the Master Servicer's, the
Seller's, the Administrator's or the Depositor's knowledge after reasonable
inquiry, there is no action, proceeding or investigation by or before any
court, governmental or administrative agency or arbitrator against or
affecting the Issuer, the Master Servicer, the Seller, the Administrator,
the Depositor or any of its or their subsidiaries, or any properties or
rights of the Issuer, the Master Servicer, the Seller, the Administrator,
the Depositor or any of its or their subsidiaries, pending or threatened,
which in any case could reasonably be expected to result in a Material
Adverse Change with respect to the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Securities, when executed,
authenticated and issued in accordance with the Indenture, and the
Transaction Documents (other than the Securities), when executed and
delivered by the Issuer, the Master Servicer, the Seller, the Administrator
and the Depositor, will constitute the legal, valid and binding obligations
of the Issuer, the Master Servicer, the Seller, the Depositor and the
Administrator, as applicable, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles and
public policy considerations as to rights of indemnification for violations
of federal securities laws. None of the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor will at any time in the future
deny that the Transaction Documents constitute the legal, valid and binding
obligations of the Issuer, the Master Servicer, the Seller, the Depositor
or the Administrator, as applicable.
(g) FINANCIAL STATEMENTS. The Financial Statements of the Seller and
the Master Servicer, copies of which have been furnished to the Insurer,
(i) are, as of the dates and for the periods referred to therein, complete
and correct in all material respects, and (ii) present fairly the financial
condition and results of operations of the Seller and the Master Servicer
as of the dates and for the periods indicated. Since the date of the most
recent Financial Statements, there has been no Material Adverse Change in
respect of the Master Servicer or the Seller. Except as disclosed in the
Financial Statements, the Master Servicer and the Seller are not subject to
any contingent liabilities or commitments that, individually or in the
aggregate, have a material possibility of causing a Material Adverse Change
in respect of the Master Servicer or the Seller.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to any of them that, if enforced, could reasonably be expected
to result in a Material Adverse Change with respect to the Issuer, the
Master Servicer, the Seller, the Administrator or the Depositor. None of
the Issuer, the Master Servicer, the Seller, the Administrator and the
Depositor are in breach of or in default under any applicable law or
administrative regulation of its respective jurisdiction of organization,
or any department, division, agency or instrumentality thereof or of the
United States or any applicable judgment or decree or any loan agreement,
note, resolution, certificate, agreement or other instrument to which the
Issuer, the Master Servicer, the Seller, the Administrator or the Depositor
is a party or is otherwise subject which, if enforced, would have a
material adverse effect on the ability of the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor, as the case may be, to
perform its respective obligations under the Transaction Documents.
(i) TAXES. The Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor and the Issuer's, the Master Servicer's,
the Seller's, the Administrator's and the Depositor's parent company or
companies have filed prior to the date hereof all federal and state tax
returns that are required to be filed and paid all taxes, including any
assessments received by them that are not being contested in good faith, to
the extent that such taxes have become due, except for any failures to file
or pay that, individually or in the aggregate, would not result in a
Material Adverse Change with respect to the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor.
(j) ACCURACY OF INFORMATION. Neither the Transaction Documents nor
other information relating to the Student Loans, the operations of the
Issuer, the Master Servicer, the Seller, the Administrator or the Depositor
(including servicing or origination of loans) or the financial condition of
the Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor (collectively, the "Documents"), as amended, supplemented or
superseded, furnished to the Insurer by the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor contains any statement of a
material fact by the Issuer, the Master Servicer, the Seller, the
Administrator or the Depositor which was untrue or misleading in any
material adverse respect when made. None of the Issuer, the Master
Servicer, the Seller, the Administrator or the Depositor has any knowledge
of circumstances that could reasonably be expected to cause a Material
Adverse Change with respect to the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor. Since the furnishing of the Documents,
there has been no change or any development or event involving a
prospective change known to the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor that would render any of the Documents
untrue or misleading in any material respect.
(k) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
Securities comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not contain
any untrue statement of a material fact and does not omit to state a
material fact necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that no representation is made with respect to the information in
the Offering Document set forth under the heading "THE GROUP II NOTES
GUARANTY INSURANCE POLICY AND THE SECURITIES INSURER" or the consolidated
financial statements of the Insurer incorporated by reference in the
Offering Document. Neither the offer nor the sale of the Securities has
been or will be in violation of the Securities Act or any other federal or
state securities laws. The Issuer is not required to be registered as an
"investment company" under the Investment Company Act.
(l) TRANSACTION DOCUMENTS. Each of the representations and warranties
of the Issuer, the Master Servicer, the Seller, the Administrator and the
Depositor contained in the Transaction Documents is true and correct in all
material respects, and the Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor hereby make each such representation and
warranty to, and for the benefit of, the Insurer as if the same were set
forth in full herein.
(m) SOLVENCY; FRAUDULENT CONVEYANCE. The Issuer, the Master Servicer,
the Seller, the Administrator and the Depositor are solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, none of the Issuer, the Master Servicer, the Seller, the
Administrator or the Depositor will be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Issuer, the Master Servicer, the Seller, the Administrator or the Depositor
intend to incur, or believe that it has incurred, debts beyond its ability
to pay as they mature. None of the Issuer, the Master Servicer, the Seller,
the Administrator or the Depositor contemplates the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Issuer, the Master Servicer, the Seller, the
Administrator or the Depositor or any of their assets. The amount of
consideration being received by the Seller upon the sale of the Securities
to the Underwriters constitutes reasonably equivalent value and fair
consideration for the interest in the Student Loans evidenced by the
Securities. The Seller are not transferring the Student Loans to the
Issuer, and the Issuer is not selling the Securities to any Underwriters,
as provided in the Transaction Documents, with any intent to hinder, delay
or defraud any of the Seller's or the Issuer's creditors.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Issuer is located in Chicago, Illinois, the principal place of business
of the Master Servicer is located in Cleveland, Ohio, the principal place
of business of Key Bank as the Seller, is located in Cleveland, Ohio, the
principal place of business of the Administrator is located in Cleveland,
Ohio and the principal place of business of the Depositor is located in
Cleveland, Ohio.
(o) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and Assumptions
insofar as they relate to the Seller are true and correct as of the Date of
Issuance.
SECTION 2.02. AFFIRMATIVE COVENANTS OF THE ISSUER, THE MASTER
SERVICER, THE SELLER, THE ADMINISTRATOR AND THE DEPOSITOR. The Issuer, the
Master Servicer, the Seller, the Administrator and the Depositor hereby agree
that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer, the
Master Servicer, the Seller, the Administrator and the Depositor shall not
be in default under the Transaction Documents and shall comply with all
material requirements of any law, rule or regulation applicable to it. None
of the Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor shall agree to any amendment to or modification of the terms of
any Transaction Documents unless the Insurer shall have given its prior
written consent.
(b) CORPORATE EXISTENCE. Subject to Sections 6.06 and 7.03 of the Sale
and Servicing Agreement and Section 4.05 of the KBUSA Student Loan Transfer
Agreement, as applicable, the Master Servicer, its successors and assigns,
the Seller, its successors and assigns, the Administrator, its successors
and assigns, and the Depositor, its successors and assigns, shall maintain
their corporate or other existence and shall at all times continue to be
duly organized under the laws of their respective jurisdictions of
incorporation or formation and duly qualified and duly authorized (as
described in section 2.01(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its articles of association or
other organizational documents. The Issuer, and its successors and assigns,
shall maintain its existence as a Delaware business trust and shall at all
times continue to be duly organized under the laws of its jurisdiction and
duly qualified and duly authorized and shall conduct its business in
accordance with the terms of its organizational documents.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION. The
Issuer, the Master Servicer, the Seller, the Administrator and the
Depositor shall keep or cause to be kept in reasonable detail books and
records of account of their assets and business, including, but not limited
to, books and records relating to the Transaction. The Master Servicer and
the Seller shall furnish or cause to be furnished to the Insurer:
(i) QUARTERLY FINANCIAL STATEMENTS. As soon as available, the
Financial Statements of the Master Servicer and Seller.
(ii) OTHER INFORMATION. Promptly upon receipt thereof, copies of
all schedules, financial information or other similar reports, and all
officer's certificates and compliance certificates, delivered by the
Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor pursuant to the terms of the Sale and Servicing Agreement or
the Indenture and, promptly upon request, such other data as the
Insurer may reasonably request.
The Insurer agrees that it and its agents, accountants and attorneys
shall keep confidential all financial statements, reports and other information
delivered by the Issuer, the Master Servicer, the Seller, the Administrator or
the Depositor pursuant to this Section 2.02(c) to the extent provided in Section
2.02(e) hereof.
(d) COMPLIANCE CERTIFICATE. The Master Servicer and the Administrator
shall deliver to the Insurer all officer's certificates and reports
required to be delivered under Sections 4.09 and 4.10 of the Sale and
Servicing Agreement.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Master Servicer, the Administrator, the Depositor and the Seller shall,
upon the reasonable request of the Insurer, permit the Insurer or its
authorized agents:
(i) to inspect the books and records of the Master Servicer, the
Administrator, the Depositor and of the Seller as they may relate to
the Securities, the obligations of the Master Servicer, the
Administrator, the Depositor or of the Seller under the Transaction
Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of the Master
Servicer, the Administrator, the Depositor or of the Seller with the
appropriate representatives of the Master Servicer, the Administrator,
the Depositor or of the Seller, as the case may be; and
(iii) with the Master Servicer's, the Administrator's, the
Depositor's or the Seller's consent, as applicable, which consent
shall not be unreasonably withheld, to discuss the affairs, finances
and accounts of the Master Servicer, the Administrator, the Depositor
or the Seller with the Master Servicer's, the Administrator's, the
Depositor's or the Seller's independent accountants, provided that an
officer of the Master Servicer, the Administrator, the Depositor or
the Seller shall have the right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the Master
Servicer, the Administrator, the Depositor or the Seller. The books and records
of the Master Servicer, the Seller, the Administrator and the Depositor shall be
maintained at the respective address of such party designated herein for receipt
of notices, unless such party shall otherwise advise the parties hereto in
writing.
The Insurer agrees that it and its shareholders, directors, agents,
accountants and attorneys shall keep confidential any matter of which it becomes
aware through such inspections or discussions (unless readily available from
public sources), except as may be otherwise required by regulation, law or court
order or requested by appropriate governmental authorities or as necessary to
preserve its rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer to make
such information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(f) NOTICE OF MATERIAL EVENTS. The Issuer, the Master Servicer, the
Seller, the Administrator and the Depositor shall be obligated (which
obligation shall be satisfied as to each if performed by the Issuer, the
Master Servicer, the Seller, the Administrator or the Depositor) promptly
to inform the Insurer in writing of the occurrence of any of the following
to the extent any of the following relate to it:
(i) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation or rule making or disciplinary proceeding by or against
the Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor that (A) could reasonably be expected to be required to be
disclosed to the Commission or (B) could reasonably be expected to
result in a Material Adverse Change with respect to the Issuer, the
Master Servicer, the Seller, the Administrator or the Depositor, or
the promulgation of any proceeding or any proposed or final rule which
would result in a Material Adverse Change with respect to the Issuer,
the Master Servicer, the Seller, the Administrator or the Depositor;
(ii) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation in any federal, state or local court or before any
arbitration board, or any such proceeding threatened by any government
agency, which, would have a material adverse effect on the Issuer, the
Owners or the Insurer;
(iii) any change in the location of the Issuer's, the Master
Servicer's, the Seller's, the Administrator's or the Depositor's
principal office or any change in the location of the Issuer's, the
Master Servicer's, the Seller's, the Administrator's or the
Depositor's books and records;
(iv) the occurrence of any Default or Event of Default or of any
Material Adverse Change;
(v) the commencement of any proceedings by or against the Issuer,
the Master Servicer, the Seller, the Administrator or the Depositor
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor or any of its or their
assets; or
(vi) the receipt of notice that (A) the Issuer, the Master
Servicer, the Seller or the Administrator is being placed under
additional regulatory supervision, and such additional regulatory
supervision may result in a Material Adverse Change with respect to
the Issuer, the Master Servicer, the Seller or the Administrator, (B)
the Depositor is being placed under regulatory supervision, (C) any
license, permit, charter, registration or approval material for the
conduct of the Issuer, the Master Servicer's, the Seller's, the
Administrator's or the Depositor's business is to be or may be
suspended or revoked, or (D) the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor is to cease and desist any
practice, procedure or policy employed by the Issuer, the Master
Servicer, the Seller, the Administrator or the Depositor in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor.
(g) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Master Servicer
will cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such places
as may be required by law to preserve and protect fully the interest of the
Indenture Trustee in the Trust Estate. The Issuer, the Master Servicer, the
Seller, the Administrator and the Depositor shall, upon the request of the
Insurer, from time to time, execute, acknowledge and deliver, or cause to
be executed, acknowledged and delivered, within 10 days of such request,
such amendments hereto and such further instruments and take such further
action as may be reasonably necessary to effectuate the intention,
performance and provisions of the Transaction Documents. In addition, each
of the Issuer, the Master Servicer, the Seller, the Administrator and the
Depositor agrees to cooperate with S&P, Fitch and Xxxxx'x in connection
with any review of the Transaction that may be undertaken by S&P, Fitch or
Xxxxx'x after the date hereof and to provide all information reasonably
requested by S&P, Fitch or Xxxxx'x.
(h) MAINTENANCE OF LICENSES. The Issuer, the Master Servicer, the
Seller, the Administrator and the Depositor, respectively, or any
successors thereof shall maintain or cause to be maintained all licenses,
permits, charters and registrations which are material to the conduct of
its business.
(i) REDEMPTION OF SECURITIES. The Issuer, the Master Servicer, the
Seller, the Administrator and the Depositor shall instruct the Indenture
Trustee, upon redemption or payment of all of the Securities pursuant to
the Indenture or otherwise, to furnish to the Insurer a notice of such
redemption and, upon a redemption or payment of all of the Securities, to
surrender the Policy to the Insurer for cancellation.
(j) DISCLOSURE DOCUMENT. Each Offering Document delivered with respect
to the Securities shall clearly disclose that the Policy is not covered by
the property/casualty insurance security fund specified in Article 76 of
the New York Insurance Law.
(k) SERVICING OF STUDENT LOANS. The Master Servicer shall perform such
actions with respect to the Student Loans as are required by or provided in
the Sale and Servicing Agreement. The Master Servicer will provide the
Insurer with written notice of any change or amendment to any Transaction
Document as currently in effect.
(l) MAINTENANCE OF TRUST. On or before each April 30, beginning in
2002, so long as any of the Securities are outstanding, the Master Servicer
shall furnish to the Insurer and the Indenture Trustee the legal opinion
required under Section 11.02(i)(2) of the Sale and Servicing Agreement. The
Master Servicer will use its best efforts to cause any necessary recordings
or filings to maintain the interest of the Indenture Trustee in the Trust
Estate.
(m) CLOSING DOCUMENTS. The Master Servicer, the Seller and the
Administrator shall provide or cause to be provided to the Insurer a
closing transcript containing an executed original copy of each document
executed in connection with the Transaction within 60 days after the date
of closing. Upon the request of the Insurer, the Master Servicer, the
Seller and the Administrator shall provide or cause to be provided to the
Insurer a copy of each of the Transaction Documents on computer diskette,
in a format acceptable to the Insurer.
(n) PREFERENCE PAYMENTS. With respect to any Preference Amount (as
defined in the Policy), the Master Servicer shall provide to the Insurer
upon the request of the Insurer:
(i) a certified copy of the final nonappealable order of a court
having competent jurisdiction ordering the recovery by a trustee in
bankruptcy as voidable preference amounts included in previous
distributions under Section 5.04(a), 5.04(b)(Y) or 8.02(c)(Y) of the
Indenture to any Owner pursuant to the United States Bankruptcy Code,
11 U.S.C. xx.xx. 101 et seq., as amended (the "Bankruptcy Code");
(ii) an opinion of counsel satisfactory to the Insurer, and upon
which the Insurer shall be entitled to rely, stating that such order
is final and is not subject to appeal;
(iii) an assignment in such form as reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and claims of
the Master Servicer, the Indenture Trustee and any Owner relating to
or arising under the Student Loan against the debtor which made such
preference payment or otherwise with respect to such preference
amount; and
(iv) appropriate instruments to effect (when executed by the
affected party) the appointment of the Insurer as agent for the
Indenture Trustee and any Owner in any legal proceeding relating to
such preference payment being in a form satisfactory to the Insurer.
SECTION 2.03. NEGATIVE COVENANTS OF THE ISSUER, THE MASTER SERVICER,
THE SELLER, THE ADMINISTRATOR AND THE DEPOSITOR. The Issuer, the Master
Servicer, the Seller, the Administrator and the Depositor hereby agree that
during the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. None of the Issuer, the Master Servicer, the
Seller, the Administrator or the Depositor shall take any action, or fail
to take any action, if such action or failure to take action may result in
a material adverse change as described in clause (ii) of the definition of
Material Adverse Change with respect to the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor, or may interfere with the
enforcement of any rights of the Insurer under or with respect to the
Transaction Documents. The Issuer, the Master Servicer, the Seller, the
Administrator or the Depositor shall give the Insurer written notice of any
such action or failure to act on the earlier of (i) the date upon which any
publicly available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of such
action or failure to act. The Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor shall furnish to the Insurer all
information requested by it that is reasonably necessary to determine
compliance with this Section (a).
(b) ADVERSE SELECTION PROCEDURE. The Master Servicer and the Seller
shall not use any adverse selection procedure in selecting Student Loans to
be transferred to the Eligible Lender Trustee from the outstanding Student
Loans that qualify under the Trust Agreement for inclusion in the Trust
Estate.
(c) WAIVER, AMENDMENTS, ETC. None of the Issuer, the Master Servicer,
the Seller, the Administrator or the Depositor shall waive, modify or
amend, or consent to any waiver, modification or amendment of, any of the
terms, provisions or conditions of any of the Transaction Documents without
the prior written consent of the Insurer.
(d) STUDENT LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as otherwise
permitted in the Sale and Servicing Agreement, the Issuer, the Master
Servicer and the Seller and the Depositor shall not alter or amend any
Student Loan, their respective collection policies or their respective
charge-off policies in a manner that materially adversely affects the
Insurer unless the Insurer shall have previously given its consent, which
consent shall not be withheld unreasonably.
SECTION 2.04. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ELIGIBLE
LENDER TRUSTEE. The Eligible Lender Trustee represents and warrants to, as of
the Date of Issuance, and covenants with the other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Eligible Lender Trustee is
a national banking association duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Eligible
Lender Trustee is duly qualified to do business, is in good standing and
has obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction, the
Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance of the
Transaction Documents by the Eligible Lender Trustee have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents of, or other action by or any notice to or
filing with, any Person, including, without limitation, any governmental
entity or the Eligible Lender Trustee's stockholders, which have not
previously been obtained or given by the Eligible Lender Trustee, as
applicable.
(c) NONCONTRAVENTION. None of the execution and delivery of the
Transaction Documents by the Eligible Lender Trustee, the consummation of
the transactions contemplated thereby or the satisfaction of the terms and
conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of any
provision of the certificate or articles of incorporation or bylaws of
the Eligible Lender Trustee or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Eligible Lender Trustee or any of
its material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Eligible Lender Trustee;
(ii) constitutes a default by the Eligible Lender Trustee under
or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the Eligible
Lender Trustee is a party or by which any of its properties, which are
individually or in the aggregate material to the Eligible Lender
Trustee, is or may be bound or affected; or
(iii) results in or requires the creation of any lien upon or in
respect of any assets of the Eligible Lender Trustee, except as
contemplated by the Transaction Documents.
(d) LEGAL PROCEEDINGS. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting the Eligible Lender Trustee or any of its
subsidiaries, or any properties or rights of the Eligible Lender Trustee or
any of its subsidiaries, pending or, to the Eligible Lender Trustee's
knowledge after reasonable inquiry, threatened, which in any case could
reasonably be expected to result in a Material Adverse Change with respect
to the Eligible Lender Trustee.
(e) VALID AND BINDING OBLIGATIONS. The Transaction Documents to which
it is a party, when executed and delivered by the Eligible Lender Trustee,
will constitute the legal, valid and binding obligations of the Eligible
Lender Trustee, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles. The Eligible Lender
Trustee will not at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Eligible Lender Trustee, as applicable.
(f) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Eligible Lender Trustee in the
conduct of its business violates any law, regulation, judgment, agreement,
order or decree applicable to the Eligible Lender Trustee that, if
enforced, could reasonably be expected to result in a Material Adverse
Change with respect to the Eligible Lender Trustee. The Eligible Lender
Trustee is neither in breach of nor in default under any applicable law or
administrative regulation of its respective jurisdiction of organization,
or any department, division, agency or instrumentality thereof or of the
United States or any applicable judgment or decree or any loan agreement,
note, resolution, certificate, agreement or other instrument to which the
Eligible Lender Trustee is a party or is otherwise subject which, if
enforced, would have a material adverse effect on the ability of the
Eligible Lender Trustee, as the case may be, to perform its respective
obligations under the Transaction Documents.
(g) TRANSACTION DOCUMENTS. Each of the representations and warranties
of the Eligible Lender Trustee contained in the Transaction Documents is
true and correct in all material respects, and the Eligible Lender Trustee
hereby makes each such representation and warranty to, and for the benefit
of, the Insurer as if the same were set forth in full herein.
(h) COMPLIANCE AND AMENDMENTS. The Eligible Lender Trustee shall
comply in all material respects with the terms and conditions of the
Transaction Documents to which it is a party and the Eligible Lender
Trustee shall not agree to any amendment to or modification of the terms of
any of the Transaction Documents to which it is a party unless the Insurer
shall otherwise give its prior written consent.
SECTION 2.05. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDENTURE
TRUSTEE. The Indenture Trustee represents and warrants to, as of the Date of
Issuance, and covenants with the other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Indenture Trustee is a New
York banking corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Indenture
Trustee is duly qualified to do business, is in good standing and has
obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction, the
Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance of the
Transaction Documents by the Indenture Trustee have been duly authorized by
all necessary corporate action and do not require any additional approvals
or consents of, or other action by or any notice to or filing with, any
Person, including, without limitation, any governmental entity or the
Indenture Trustee's stockholders, which have not previously been obtained
or given by the Indenture Trustee, as applicable.
(c) [RESERVED]
(d) [RESERVED]
(e) VALID AND BINDING OBLIGATIONS. The Securities, when executed,
authenticated and issued in accordance with the Indenture, and the
Transaction Documents (other than the Securities) to which it is a party,
when executed and delivered by the Indenture Trustee, will constitute the
legal, valid and binding obligations of the Indenture Trustee, enforceable
in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles. The Indenture Trustee will not at any time in the
future deny that the Transaction Documents constitute the legal, valid and
binding obligations of the Indenture Trustee, as applicable.
(f) COMPLIANCE WITH LAW, ETC. No authorization, consent or approval of
or filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
is or will be necessary for the execution and delivery of the Indenture
Trustee of this Insurance Agreement or for the performance by the Indenture
Trustee of its obligations hereunder. Neither the execution and delivery of
this Insurance Agreement nor the consummation of any of the transactions
contemplated by this Insurance Agreement shall constitute or result in a
violation of any of New York or Federal law, rule or regulation applicable
to the Indenture Trustee.
(g) TRANSACTION DOCUMENTS. Each of the representations and warranties
of the Indenture Trustee contained in the Transaction Documents is true and
correct in all material respects, and the Indenture Trustee hereby makes
each such representation and warranty to, and for the benefit of, the
Insurer as if the same were set forth in full herein.
(h) COMPLIANCE AND AMENDMENTS. The Indenture Trustee shall comply in
all material respects with the terms and conditions of the Transaction
Documents to which it is a party and the Indenture Trustee shall not agree
to any amendment to or modification of the terms of any of the Transaction
Documents to which it is a party unless the Insurer shall otherwise give
its prior written consent.
ARTICLE III
THE POLICY; REIMBURSEMENT
SECTION 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) PAYMENT OF INITIAL PREMIUM AND EXPENSES. The Insurer shall have
been paid by the Issuer, the Master Servicer, the Seller and the Depositor,
that portion of a nonrefundable Premium payable on the Date of Issuance,
and the Master Servicer shall agree to reimburse or pay directly other fees
and expenses identified in Section 3.02 hereof as payable.
(b) TRANSACTION DOCUMENTS. The Insurer shall have received a fully
executed copy of the Commitment and a copy of each of the Transaction
Documents, in form and substance satisfactory to the Insurer, duly
authorized, executed and delivered by each party thereto.
(c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Insurer shall have
received a copy of (i) the articles of association, limited liability
company agreement and bylaws or other organizational documents, as
applicable, of the Master Servicer, the Seller, the Administrator and the
Depositor (ii) the resolutions of the Seller's Board of Directors or
members, as applicable, authorizing the sale of the Student Loans and the
execution, delivery and performance by the Master Servicer, the Seller, the
Administrator and the Depositor of the Transaction Documents and the
transactions contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Master Servicer, the Seller, the Administrator
and the Depositor (which certificate shall state that such certificate or
articles of incorporation, bylaws and resolutions or other organizational
documents are in full force and effect without modification on the Date of
Issuance).
(d) INCUMBENCY CERTIFICATE. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the Master
Servicer, the Seller and the Depositor regarding the authority of the
officers of the Master Servicer, the Seller, the Administrator and the
Depositor to execute and deliver the Transaction Documents.
(e) THE CERTIFICATE OF TRUST OF THE ISSUER. The Insurer shall have
received a copy of the Certificate of Trust of the Issuer.
(f) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The representations
and warranties of the Issuer, the Master Servicer, the Seller, the
Administrator and the Depositor set forth or incorporated by reference in
this Insurance Agreement shall be true and correct as of the Date of
Issuance as if made on the Date of Issuance, and the Insurer shall have
received a certificate of appropriate officers of the Issuer, the Master
Servicer, the Seller, the Administrator and the Depositor to that effect.
(g) OPINIONS OF COUNSEL.
(i) The law firm of Xxxxxxxx Xxxx LLP shall have issued its
favorable opinion, in form and substance acceptable to the Insurer and
its counsel, regarding the corporate existence and authority of the
Master Servicer, the Seller, the Administrator and the Depositor and
the validity and enforceability of the Transaction Documents against
such parties.
(ii) The law firm of Xxxxxxxx Xxxx LLP shall have furnished its
opinions, in form and substance acceptable to the Insurer and its
counsel, regarding the sale of the Student Loans and the tax treatment
of payments on the Securities under federal tax laws.
(iii) The Insurer shall have received such other opinions of
counsel, in form and substance acceptable to the Insurer and its
counsel, addressing such other matters as the Insurer may reasonably
request. Each opinion of counsel delivered in connection with the
Transaction shall be addressed to and delivered to the Insurer.
(h) APPROVALS, ETC. The Insurer shall have received true and correct
copies of all approvals, licenses and consents, if any, including, without
limitation, any required approval of the shareholders or members, as
applicable, of the Master Servicer, the Seller, the Administrator and the
Depositor, required in connection with the Transaction.
(i) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it
is sought to restrain or prohibit or to obtain damages or other relief in
connection with the Transaction Documents or the consummation of the
Transaction.
(j) LEGALITY. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court that would make the transactions
contemplated by any of the Transaction Documents illegal or otherwise
prevent the consummation thereof.
(k) ISSUANCE OF RATINGS. The Insurer shall have received confirmation
that the risk secured by the Policy constitutes at least an investment
grade risk by S&P, Fitch and Xxxxx'x and that the Securities, when issued,
will be rated "AAA" by S&P, Fitch and "Aaa" by Xxxxx'x.
(l) NO DEFAULT. No Default or Event of Default shall have occurred.
(m) ADDITIONAL ITEMS. The Insurer shall have received such other
documents, instruments, approvals or opinions requested by the Insurer or
its counsel as may be reasonably necessary to effect the Transaction,
including, but not limited to, evidence satisfactory to the Insurer and its
counsel that the conditions precedent, if any, in the Transaction Documents
have been satisfied.
(n) CONFORM TO DOCUMENTS. The Insurer and its counsel shall have
determined that all documents, certificates and opinions to be delivered in
connection with the Securities conform to the terms of the Transaction
Documents.
(o) COMPLIANCE WITH COMMITMENT. All other terms, conditions and
requirements of the Commitment shall have been satisfied.
(p) SATISFACTION OF CONDITIONS OF THE UNDERWRITING AGREEMENT. All
conditions in the Underwriting Agreement relating to the Underwriters'
obligation to purchase the Securities shall have been satisfied.
(q) UNDERWRITING AGREEMENT. The Insurer shall have received copies of
each of the documents, and shall be entitled to rely on each of the
documents, required to be delivered to the Underwriters pursuant to the
Underwriting Agreement.
SECTION 3.02. PAYMENT OF FEES AND PREMIUM.
(a) LEGAL AND ACCOUNTING FEES. The Master Servicer, the Seller and the
Depositor shall pay or cause to be paid, on the Date of Issuance, legal
fees and disbursements incurred by the Insurer in connection with the
issuance of the Policy and any fees of the Insurer's auditors in accordance
with the terms of the Commitment. Any fees of the Insurer's auditors
payable in respect of any amendment or supplement to the Offering Document
or any other Offering Document incurred after the Date of Issuance shall be
paid by the Master Servicer, the Seller and the Depositor on demand.
(b) PREMIUM. In consideration of the issuance by the Insurer of the
Policy, the Insurer shall be entitled to receive the Premium as and when
due in accordance with the terms of the Commitment (i) in the case of
Premium due on or before the Date of Issuance, directly from the Issuer and
(ii) in the case of Premium due after the Date of Issuance, pursuant to the
Indenture. For purposes of the Indenture and the Sale and Servicing
Agreement, the term "Premium Percentage" shall have the meaning set forth
in Article I hereof. The Premium shall be calculated according to paragraph
1 of the Commitment for the amount due on or before the Date of Issuance
for the amount due on each Distribution Date. The Premium paid hereunder or
under the Indenture shall be nonrefundable without regard to whether the
Insurer makes any payment under the Policy or any other circumstances
relating to the Securities or provision being made for payment of the
Securities prior to maturity. The Master Servicer, the Seller, the
Depositor, and the Indenture Trustee shall make all payments of Premium to
be made by them by wire transfer to an account designated from time to time
by the Insurer by written notice to the Master Servicer, the Seller, the
Depositor, and the Indenture Trustee.
SECTION 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.
(a) In accordance with Section 5.04 of the Indenture or Section 5.05
of the Sale and Servicing Agreement, the Insurer shall be entitled to
reimbursement for any payment made by the Insurer under the Policy, which
reimbursement shall be due and payable on the date that any amount is to be
paid pursuant to a Notice (as defined in the Policy), in an amount equal to
the amount to be so paid and all amounts previously paid that remain
unreimbursed, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect of any
unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate
of interest equal to the Late Payment Rate.
(b) Notwithstanding anything in Section 3.03(a) to the contrary, the
Master Servicer and the Seller agree to reimburse the Insurer as follows:
(i) from the Seller, for payments made under the Policy arising as a result
of the Seller's failure to repurchase any Student Loan required to be
repurchased pursuant to the KBUSA Student Loan Transfer Agreement, together
with interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after
as well as before judgment), at a rate of interest equal to the Late
Payment Rate, and (ii) from the Master Servicer, for payments made under
the Policy, arising as a result of (A) the Master Servicer's failure to
deposit into the Collection Account any amount required to be so deposited
pursuant to the Sale and Servicing Agreement or (B) the Master Servicer's
failure to repurchase any Student Loan required to be repurchased under the
Sale and Servicing Agreement, together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect to
any unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate
of interest equal to the Late Payment Rate.
(c) The Master Servicer and the Seller agree to pay to the Insurer as
follows: any and all charges, fees, costs and expenses that the Insurer may
reasonably pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Policy to the extent the
Insurer has not been immediately reimbursed on the date that any amount is
paid by the Insurer under the Policy, (ii) the enforcement, defense or
preservation of any rights in respect of any of the Transaction Documents,
including defending, monitoring or participating in any litigation or
proceeding (including any insolvency or bankruptcy proceeding in respect of
any Transaction participant or any affiliate thereof) relating to any of
the Transaction Documents, any party to any of the Transaction Documents,
in its capacity as such a party, or the Transaction, (iii) any amendment,
waiver or other action with respect to, or related to, any Transaction
Document, whether or not executed or completed, or (iv) preparation of a
closing transcript of the Transaction documents; costs and expenses shall
include a reasonable allocation of compensation and overhead attributable
to the time of employees of the Insurer spent in connection with the
actions described in clause (ii) above, and the Insurer reserves the right
to charge a reasonable fee as a condition to executing any waiver or
consent proposed in respect of any of the Transaction Documents.
(d) The Master Servicer, the Seller and the Depositor agree to pay to
the Insurer as follows: interest on any and all amounts described in
subsections (b), (c), (e) and (f) of this Section 3.03 from the date
payable or paid by such party until payment thereof in full, and interest
on any and all amounts described in Section 3.02 hereof from the date due
until payment thereof in full, in each case payable to the Insurer at the
Late Payment Rate per annum.
(e) The Master Servicer and the Seller agree to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to, the
Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor, respectively, including, without limitation, any amounts payable
by the Issuer, the Master Servicer, the Seller, the Administrator or the
Depositor pursuant to the Securities or any other Transaction Documents.
(f) Following termination of the Indenture after the Master Servicer
exercises its option under Section 9.01(a) of the Sale and Servicing
Agreement, the Master Servicer agrees to reimburse the Insurer for any
Insured Payments required to be made pursuant to the Policy subsequent to
the date of such termination.
All such amounts are to be immediately due and payable without demand.
SECTION 3.04. INDEMNIFICATION; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any other
rights of the Insurer pursuant hereto or under law or equity, the
Depositor, the Seller, the Master Servicer and any successors thereto agree
to pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents and each person, if
any, who controls the Insurer within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act from and
against any and all claims, Losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or
obligations whatsoever paid by the Insurer (herein collectively referred to
as "Liabilities") of any nature arising out of or relating to the
transactions contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Document or in any
amendment or supplement thereto or in any preliminary offering
document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as such Liabilities arise out of or
are based upon any such untrue statement or omission or
allegation thereof based upon information set forth in the
Offering Document under the caption "THE GROUP II NOTES GUARANTY
INSURANCE POLICY AND THE SECURITIES INSURER," or in the financial
statements of the Insurer, including any information in any
amendment or supplement to the Offering Document furnished by the
Insurer in writing expressly for use therein that amends or
supplements such information (all such information being referred
to herein as "Insurer Information");
(ii) to the extent not covered by clause (i) above, any act
or omission of the Seller, the Master Servicer or the Depositor,
or the allegation thereof, in connection with the offering,
issuance, sale or delivery of the Securities other than by reason
of false or misleading information provided by the Insurer in
writing for inclusion in the Offering Document as specified in
clause (i) above;
(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any member, any director, officer, employee
or agent of the Master Servicer, the Seller or the Depositor;
(iv) the violation by the Depositor, the Seller or the
Master Servicer of any federal or state securities, banking or
antitrust laws, rules or regulations in connection with the
issuance, offer and sale of the Securities or the transactions
contemplated by the Transaction Documents;
(v) the violation by the Depositor, the Seller or the Master
Servicer of any federal or state laws, rules or regulations
relating to the Transaction, including without limitation the
maximum amount of interest permitted to be received on account of
any loan of money or with respect to the Student Loans;
(vi) the breach by the Depositor, the Seller or the Master
Servicer of any of its obligations under this Insurance Agreement
or any of the other Transaction Documents; and
(vii) the breach by the Master Servicer, the Seller or the
Depositor of any representation or warranty on the part of the
Master Servicer, the Seller or the Depositor contained in the
Transaction Documents or in any certificate or report furnished
or delivered to the Insurer thereunder.
This indemnity provision shall survive the termination of this
Insurance Agreement and shall survive until the statute of limitations has run
on any causes of action which arise from one of these reasons and until all
suits filed as a result thereof have been finally concluded.
(b) The Seller agrees to indemnify the Indenture Trustee and the
Insurer for any and all Liabilities incurred by the Issuer and the Insurer
due to any claim, counterclaim, rescission, setoff or defense asserted by
an Obligor under any Student Loan subject to the Federal Trade Commission
regulations provided in 16 C.F.R. Part 433.
(c) Any party which proposes to assert the right to be indemnified
under this Section 3.04 will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against the Master Servicer, the
Seller or the Depositor under this Section 3.04, notify the Master
Servicer, the Seller or the Depositor of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. In case any
action, suit or proceeding shall be brought against any indemnified party
and it shall notify the Master Servicer, the Seller or the Depositor of the
commencement thereof, the Master Servicer, the Seller or the Depositor
shall be entitled to participate in, and, to the extent that it shall wish,
to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the Master Servicer, the Seller or
the Depositor to such indemnified party of its election so to assume the
defense thereof, the Master Servicer, the Seller or the Depositor shall not
be liable to such indemnified party for any legal or other expenses other
than reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified
party shall have the right to employ its counsel in any such action the
defense of which is assumed by the Master Servicer, the Seller or the
Depositor in accordance with the terms of this subsection (c), but the fees
and expenses of such counsel shall be at the expense of such indemnified
party unless the employment of counsel by such indemnified party has been
authorized by the Issuer, the Master Servicer, the Seller or the Depositor.
The Master Servicer, the Seller or the Depositor shall not be liable for
any settlement of any action or claim effected without its consent.
(d) In addition to any and all rights of indemnification or any other
rights of the Insurer pursuant hereto or under law or equity, the Eligible
Lender Trustee agrees to pay, and to protect, indemnify and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents,
including each person, if any, who controls the Insurer within the meaning
of either Section 15 of the Securities Act of 1933, as amended, or Section
20 of the Securities and Exchange Act of 1934, as amended, from and against
any and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or
obligations whatsoever of any nature arising out of the breach by the
Eligible Lender Trustee of any of its obligations under this Insurance
Agreement or under any other Transaction Document to which it is a party.
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits
filed as a result thereof have been finally concluded.
SECTION 3.05. PAYMENT PROCEDURE. In the event of any payment by the
Insurer, the Eligible Lender Trustee, the Indenture Trustee, the Issuer, the
Master Servicer, the Seller, the Administrator and the Depositor agree to accept
the voucher or other evidence of payment as prima facie evidence of the
propriety thereof and the liability therefor to the Insurer. All payments to be
made to the Insurer under this Insurance Agreement shall be made to the Insurer
in lawful currency of the United States of America in immediately available
funds at the notice address for the Insurer as specified in Section 6.02 hereof
on the date when due or as the Insurer shall otherwise direct by written notice
to the other parties hereto. In the event that the date of any payment to the
Insurer or the expiration of any time period hereunder occurs on a day which is
not a Business Day, then such payment or expiration of time period shall be made
or occur on the next succeeding Business Day with the same force and effect as
if such payment was made or time period expired on the scheduled date of payment
or expiration date. Payments to be made to the Insurer under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.
SECTION 3.06. INDEMNIFICATION OF THE INDENTURE TRUSTEE; LIMITATION OF
LIABILITY.
(a) Following the occurrence and during the continuation of an Event
of Default with respect to the Securities under Sections 5.01(i), 5.01(ii),
5.01(iv) or 5.01(v) of the Indenture or following the acceleration of the
Securities pursuant to Section 5.02 of the Indenture and until such
acceleration has been rescinded and annulled (in any such case, an "Insurer
Indemnification Period"), the Insurer agrees, to the extent not otherwise
paid by the Administrator pursuant to the terms of Section 6.07 of the
Indenture or paid to the Indenture Trustee pursuant to clause SECOND or
SEVENTH of Section 5.04(b)(Y) of the Indenture, to pay and indemnify the
Indenture Trustee from and against any and all loss, liability or
reasonable expense (including, without limitation, reasonable fees and
expenses of attorneys) arising in respect of or in connection with any
action taken by the Indenture Trustee during an Insurer Indemnification
Period which action has been consented to or directed by the Insurer. The
term "action" used in the prior sentence shall include any action not taken
by the Indenture Trustee upon the direction of the Insurer or failure of
the Insurer to so direct, in each case after consultation with the Insurer.
In the event the Indenture Trustee will bear any such loss, liability and
expense, the Indenture Trustee (to the extent reasonably practicable) shall
notify the Insurer of the manner in which it intends to address such loss,
liability and expense and shall permit the Insurer to direct the Indenture
Trustee's actions in response thereto. The Insurer shall not be liable to
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own
willful misconduct, negligence or bad faith. This indemnity provision shall
survive the termination of this Insurance Agreement.
(b) The provisions of this Section 3.06 are in addition to, and do not
contravene or override, the provisions of Section 6.01(g) of the Indenture.
(c) In the event the Indenture Trustee proposes to assert the right to
be indemnified under this Section 3.06 it will, promptly after receipt of
notice of commencement of any action, suit or proceeding against it in
respect of which a claim is to be made against the Insurer under this
Section 3.06, notify the Insurer of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served. In case any action,
suit or proceeding shall be brought against the Indenture Trustee and it
shall notify the Insurer of the commencement thereof, the Insurer shall be
entitled to participate in, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
Indenture Trustee, and after notice from the Insurer to the Indenture
Trustee of its election so to assume the defense thereof, the Insurer shall
not be liable to the Indenture Trustee for any legal or other expenses
other than reasonable costs of investigation subsequently incurred by the
Indenture Trustee in connection with the defense thereof. The Indenture
Trustee shall have the right to employ its counsel in any such action the
defense of which is assumed by the Insurer in accordance with the terms of
this subsection (c), but the fees and expenses of such counsel shall be at
the expense of the Indenture Trustee unless (i) the employment of counsel
by the Indenture Trustee has been authorized by the Insurer, or (ii) the
named parties to any such action include the Indenture Trustee on the one
hand and, on the other hand, the Insurer, and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Insurer shall not be liable
for any settlement of any action or claim effected without its consent.
ARTICLE IV
FURTHER AGREEMENTS
SECTION 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Issuer, the Master Servicer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator or the Depositor or from any other source under
the Transaction Documents and all amounts payable under the Securities have been
paid in full; provided, however, that the provisions of Sections 3.02, 3.03,
3.04 and 4.06 hereof shall survive any termination of this Insurance Agreement.
SECTION 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
(a) Excepting at such times as a default in payment under the Policy
shall exist or shall have occurred, none of the Issuer, the Master
Servicer, the Eligible Lender Trustee, the Indenture Trustee, the Seller,
the Administrator or the Depositor shall grant any waiver of rights under
any of the Transaction Documents to which any of them is a party without
the prior written consent of the Insurer, and any such waiver without the
prior written consent of the Insurer shall be null and void and of no force
or effect.
(b) To the extent permitted by law, the Issuer, the Master Servicer,
the Eligible Lender Trustee, the Indenture Trustee, the Seller, the
Administrator and the Depositor agree that they will, from time to time,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such supplements hereto and such further instruments as the
Insurer may request and as may be required in the Insurer's judgment to
effectuate the intention of or facilitate the performance of this Insurance
Agreement.
SECTION 4.03. OBLIGATIONS ABSOLUTE.
(a) The obligations of the Issuer, the Master Servicer, the Eligible
Lender Trustee, the Indenture Trustee, the Seller, the Administrator and
the Depositor hereunder shall be absolute and unconditional and shall be
paid or performed strictly in accordance with this Insurance Agreement
under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to any of the
Transaction Documents, the Securities or the Policy;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that the Issuer, the Master Servicer, the
Eligible Lender Trustee, the Indenture Trustee, the Seller, the
Administrator or the Depositor may have at any time against the
Insurer or any other Person;
(iv) any document presented in connection with the Policy proving
to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(v) any payment by the Insurer under the Policy against
presentation of a certificate or other document that does not strictly
comply with terms of the Policy;
(vi) any failure of the Issuer, the Master Servicer, the Eligible
Lender Trustee, the Indenture Trustee, the Seller, the Administrator
or the Depositor to receive the proceeds from the sale of the
Securities; or
(vii) any breach by the Issuer, the Master Servicer, the Eligible
Lender Trustee, the Indenture Trustee, the Seller, the Administrator
or the Depositor of any representation, warranty or covenant contained
in any of the Transaction Documents.
(b) The Issuer, the Master Servicer, the Eligible Lender Trustee, the
Indenture Trustee, the Seller, the Administrator, the Depositor and any and
all others who are now or may become liable for all or part of the
obligations of the Issuer, the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee, the Seller, the Administrator or the
Depositor under this Insurance Agreement agree to be bound by this
Insurance Agreement and (i) to the extent permitted by law, waive and
renounce any and all redemption and exemption rights and the benefit of all
valuation and appraisement privileges against the indebtedness and
obligations evidenced by any Transaction Document or by any extension or
renewal thereof; (ii) waive presentment and demand for payment, notices of
nonpayment and of dishonor, protest of dishonor and notice of protest;
(iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the Transaction
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or any defense other than payment, or any right of setoff or
recoupment arising out of any breach under any of the Transaction Documents
by any party thereto or any beneficiary thereof, or out of any obligation
at any time owing to the Issuer, the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee, the Seller, the Administrator or the
Depositor; (v) agree that its liabilities hereunder shall, except as
otherwise expressly provided in this Section 4.03, be unconditional and
without regard to any setoff, counterclaim or the liability of any other
Person for the payment hereof; (vi) agree that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for such
event and not for any subsequent event; (vii) consent to any and all
extensions of time that may be granted by the Insurer with respect to any
payment hereunder or other provisions hereof and to the release of any
security at any time given for any payment hereunder, or any part thereof,
with or without substitution, and to the release of any Person or entity
liable for any such payment; and (viii) consent to the addition of any and
all other makers, endorsers, guarantors and other obligors for any payment
hereunder, and to the acceptance of any and all other security for any
payment hereunder, and agree that the addition of any such obligors or
security shall not affect the liability of the parties hereto for any
payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Issuer, the
Master Servicer, the Eligible Lender Trustee, the Indenture Trustee, the
Seller, the Administrator or the Depositor from pursuing any rights or
remedies it may have against any other Person in a separate legal
proceeding.
SECTION 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. None
of the Issuer, the Master Servicer, the Eligible Lender Trustee, the
Indenture Trustee, the Seller, the Administrator or the Depositor may
assign its rights under this Insurance Agreement, or delegate any of its
duties hereunder, without the prior written consent of the Insurer. Any
assignment made in violation of this Insurance Agreement shall be null and
void.
(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
the Insurer may in its discretion determine; provided, however, that no
such participation or reinsurance agreement or arrangement shall relieve
the Insurer of any of its obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge to
any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any
rights of the Insurer under the Transaction Documents or with respect to
any real or personal property or other interests pledged to the Insurer, or
in which the Insurer has a security interest, in connection with the
Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right,
remedy or claim, express or implied, upon any Person, including,
particularly, any Owner, other than the Insurer against the Issuer, the
Master Servicer, the Eligible Lender Trustee, the Indenture Trustee, the
Seller, the Administrator or the Depositor, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the sole
and exclusive benefit of the parties hereto and their successors and
permitted assigns. Neither the Indenture Trustee nor any Owner shall have
any right to payment from any Premiums paid or payable hereunder or under
the Indenture or from any other amounts paid by the Issuer, the Master
Servicer, the Eligible Lender Trustee, the Indenture Trustee, the Seller,
the Administrator or the Depositor pursuant to Section 3.02, 3.03 or 3.04
hereof.
(e) The Issuer, the Master Servicer, the Indenture Trustee, the
Seller, the Depositor, the Administrator and the Eligible Lender Trustee
agree that the Insurer shall have all rights of a third-party beneficiary
in respect of the Indenture, the Sale and Servicing Agreement and each
other Transaction Document to which it is not a signing party and hereby
incorporate and restate their representations, warranties and covenants as
set forth therein for the benefit of the Insurer.
SECTION 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of
its officers, directors or employees shall be liable or responsible for (a) the
use that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Insurer (or its Fiscal Agent) may accept
documents that appear on their face to be in order, without responsibility for
further investigation.
SECTION 4.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So
long as this Agreement is in effect, and for one year following its termination,
none of the parties hereto will file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law against the Issuer or the Depositor.
SECTION 4.07. ELIGIBLE LENDER TRUSTEE, INDENTURE TRUSTEE, DEPOSITOR,
ADMINISTRATOR, SELLER, ISSUER AND MASTER SERVICER TO JOIN IN ENFORCEMENT ACTION.
To the extent necessary to enforce any right of the Insurer in or remedy of the
Insurer under any Student Loan, the Eligible Lender Trustee, the Indenture
Trustee, the Depositor, the Administrator, the Issuer, the Seller and the Master
Servicer agree to join in any action initiated by the Issuer or the Insurer for
the protection of such right or exercise of such remedy.
SECTION 4.08. SUBROGATION. To the extent of any payments under the
Policy, the Insurer shall be fully subrogated to any remedies against the
Issuer, the Depositor, the Administrator, the Issuer, the Seller or the Master
Servicer or in respect of the Student Loans available to the Indenture Trustee
under the Sale and Servicing Agreement and the Indenture. The Indenture Trustee
acknowledges such subrogation and, further, agrees to execute such instruments
prepared by the Insurer and to take such reasonable actions as, in the sole
judgment of the Insurer, are necessary to evidence such subrogation and to
perfect the rights of the Insurer to receive any moneys paid or payable under
the Indenture and the Sale and Servicing Agreement.
ARTICLE V
DEFAULTS; REMEDIES
SECTION 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) any representation or warranty made by the Issuer, the Master
Servicer, the Eligible Lender Trustee, the Indenture Trustee, the Seller,
the Administrator or the Depositor hereunder or under the Transaction
Documents, or in any certificate furnished hereunder or under the
Transaction Documents, shall prove to be untrue or incomplete in any
material respect;
(b) (i) the Issuer, the Master Servicer, the Eligible Lender Trustee,
the Seller or the Depositor shall fail to pay when due any amount payable
by the Issuer, the Master Servicer, the Eligible Lender Trustee, the
Indenture Trustee, the Seller, the Administrator or the Depositor hereunder
or (ii) a legislative body has enacted any law that declares or a court of
competent jurisdiction shall find or rule that any Transaction Document is
not valid and binding on the Issuer, the Master Servicer, the Eligible
Lender Trustee, the Indenture Trustee, the Seller, the Administrator or the
Depositor;
(c) the occurrence and continuance of an "Event of Default" under the
Indenture, as defined therein.
(d) any failure on the part of the Issuer, the Master Servicer, the
Eligible Lender Trustee, the Indenture Trustee, the Seller, the
Administrator or the Depositor duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Issuer,
the Master Servicer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator or the Depositor contained in this Insurance
Agreement or in any other Transaction Document which continues unremedied
for a period of 30 days with respect to this Insurance Agreement, or, with
respect to any other Transaction Document, beyond any cure period provided
for therein, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Issuer, the
Master Servicer, the Seller, the Administrator or the Depositor, as
applicable, by the Insurer (with a copy to the Eligible Lender Trustee and
the Indenture Trustee) or by the Eligible Lender Trustee or the Indenture
Trustee (with a copy to the Insurer);
(e) decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law or
the appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Issuer, the Master
Servicer, the Seller, the Administrator or the Depositor and such decree or
order shall have remained in force undischarged or unstayed for a period of
90 consecutive days;
(f) the Issuer, the Master Servicer, the Seller, the Administrator or
the Depositor shall consent to the appointment of a conservator or receiver
or liquidator or other similar official in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Issuer, the Master Servicer, the Seller, the Administrator
or the Depositor or of or relating to all or substantially all of the
property of either;
(g) the Issuer, the Master Servicer, the Seller, the Administrator or
the Depositor 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, reorganization or other similar statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment
of its obligations;
(h) the occurrence and continuance of a "Master Servicer Default" or
an "Administrator Default" under the Sale and Servicing Agreement as
defined herein; or
(i) the failure of the Seller to comply with, or maintain the accuracy
of, the Opinion Facts and Assumptions.
SECTION 5.02. REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the Insurer may
exercise any one or more of the rights and remedies set forth below:
(i) exercise any rights and remedies under the Transaction
Documents in accordance with the terms of the Transaction Documents or
direct the Indenture Trustee or the Eligible Lender Trustee to
exercise such remedies in accordance with the terms of the Transaction
Documents; or
(ii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
under the Transaction Documents or to enforce performance and
observance of any obligation, agreement or covenant of the Issuer, the
Master Servicer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator or the Depositor under the Transaction
Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy,
but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Documents or existing at law or in
equity. No delay or omission to exercise any right or power accruing under
the Transaction Documents upon the happening of any event set forth in
Section 5.01 hereof shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In
order to entitle the Insurer to exercise any remedy reserved to the Insurer
in this Article, it shall not be necessary to give any notice other than
such notice as may be required in this Article V.
SECTION 5.03. WAIVERS.
(a) No failure by the Insurer to exercise, and no delay by the Insurer
in exercising, any right hereunder shall operate as a waiver thereof. The
exercise by the Insurer of any right hereunder shall not preclude the
exercise of any other right, and the remedies provided herein to the
Insurer are declared in every case to be cumulative and not exclusive of
any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting
forth the terms, conditions and extent of such waiver signed by the Insurer
and delivered to the Issuer, the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee, the Seller, the Administrator and the
Depositor. Unless such writing expressly provides to the contrary, any
waiver so granted shall extend only to the specific event or occurrence
which gave rise to the Event of Default so waived and not to any other
similar event or occurrence which occurs subsequent to the date of such
waiver.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. AMENDMENTS, ETC. This Insurance Agreement may be
amended, modified or terminated only by written instrument or written
instruments signed by the parties hereto. The Master Servicer agrees to promptly
provide a copy of any amendment to this Insurance Agreement to the Indenture
Trustee, the Eligible Lender Trustee, S&P, Fitch and Xxxxx'x. No act or course
of dealing shall be deemed to constitute an amendment, modification or
termination hereof.
SECTION 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF)
(KeyCorp Student Loan Trust 2001-A
Floating Rate Asset-Backed Notes)
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(in each case in which notice or other communication to
the Insurer refers to an Event of Default, a claim on the
Policy or with respect to which failure on the part of the
Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
communication should also be sent to the attention of each
of the general counsel and the Insurer and shall be marked
to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Seller:
Key Bank USA, National Association
4th Floor
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Key Education Resources,
KeyCorp Student Loan Trust 2001-A
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(c) To the Master Servicer:
Key Bank USA, National Association
4th Floor
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Key Education Resources,
KeyCorp Student Loan Trust 2001-A
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(d) To the Eligible Lender Trustee:
Bank One, National Association
Suite 1L1-0126
0 Xxxx Xxx Xxxxx
Xxxxxxx, XX 00000
Attention: Corporate Trust Administration
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(e) To the Depositor:
Key Consumer Receivables LLC
Key Tower
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(f) To the Indenture Trustee:
The Chase Manhattan Bank
14th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Structured Finance Institution Trust Service
Telecopy No.: (000) 000-0000
Confirmation:
(g) To the Administrator:
Key Bank USA, National Association
4th Floor
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Key Education Resources,
KeyCorp Student Loan Trust 2001-A
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
SECTION 6.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
SECTION 6.04. GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CHOICE OF LAW PROVISIONS.
SECTION 6.05. CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York
and any court in the State of New York located in the City and County of
New York, and any appellate court from any thereof, in any action, suit or
proceeding brought against it and to or in connection with any of the
Transaction Documents or the transactions contemplated thereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any
such action or proceeding may be heard or determined in such New York state
court or, to the extent permitted by law, in such federal court. The
parties hereto agree that a final nonappealable judgment in any such
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, the parties hereto hereby
waive and agree not to assert by way of motion, as a defense or otherwise
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the
subject matter thereof may not be litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Except as provided in Section 4.06 herein, nothing contained in
this Insurance Agreement shall limit or affect the Insurer's right to serve
process in any other manner permitted by law or to start legal proceedings
relating to any of the Transaction Documents against any party hereto or
its or their property in the courts of any jurisdiction.
SECTION 6.06. CONSENT OF THE INSURER. In the event that the consent of
the Insurer is required under any of the Transaction Documents, the Insurer
shall not unreasonably withhold its consent except that the determination
whether to grant or withhold any such consent required under Article VIII of the
Sale and Servicing Agreement or Article V of the Indenture shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person.
SECTION 6.07. COUNTERPARTS. This Insurance Agreement may be executed
in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
SECTION 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
SECTION 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives,
to the fullest extent permitted by law, any right to a trial by jury in respect
of any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (a) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.
SECTION 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Securities or the Policy, it being expressly agreed
and understood that each Transaction Document is solely a corporate obligation
of each party hereto, and that any and all personal liability, either at common
law or in equity, or by statute or constitution, of every such officer,
employee, director, affiliate or shareholder for breaches by any party hereto of
any obligations under any Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.
SECTION 6.11. ENTIRE AGREEMENT. The Transaction Documents and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
[Remainder of page intentionally blank; signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By: /S/ XXXX X. XXXXXX
------------------------
Assistant Secretary
KEY BANK USA, NATIONAL
ASSOCIATION, as Master Servicer
By: /S/ XXXXX X. XXXXX
---------------------------
Senior Vice President
KEY BANK USA, NATIONAL
ASSOCIATION, as Seller
By: /S/ XXXXX X. XXXXX
---------------------------
Senior Vice President
KEY CONSUMER RECEIVABLES LLC,
as Depositor
By: /S/ XXXXX X. XXXXX
---------------------------
President
KEY BANK USA, NATIONAL
ASSOCIATION, as Administrator
By: /S/ XXXXX X. XXXXX
---------------------------
Senior Vice President
KEYCORP STUDENT LOAN TRUST
2001-A, as Issuer
By Bank One, National
Association, not
in its individual
capacity but
solely as Eligible
Lender Trustee on
behalf of the
Issuer
By: /S/ XXXXX X. XXXXXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Authorized Officer
BANK ONE, NATIONAL
ASSOCIATION, as Eligible
Lender Trustee
By: /S/ XXXXX X. XXXXXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By: /S/ XXXXXXXX XXXXX
---------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President
