Exhibit 4.2
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Third Supplemental Indenture of Trust
by and between
Education Funding Capital Trust-I
and
Fifth Third Bank,
as Indenture Trustee
and
Fifth Third Bank,
as Trust Eligible Lender Trustee
Dated as of December , 2002
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Third Supplemental Indenture of Trust
This Third Supplemental Indenture of Trust (this "Supplemental Indenture")
dated as of December , 2002 is by and between Education Funding Capital
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Trust-I, a Delaware business trust (the "Issuer"), Fifth Third Bank, a banking
corporation organized under the laws of the State of Ohio, as indenture trustee
(the "Indenture Trustee"), and Fifth Third Bank, a banking corporation organized
under the laws of the State of Ohio, as Trust Eligible Lender Trustee (the
"Trust Eligible Lender Trustee"). All capitalized terms used in these preambles,
recitals and granting clauses shall have the same meanings assigned thereto in
the Indenture (defined below).
W I T N E S S E T H:
Whereas, the Issuer has previously entered into an Indenture of Trust dated
as of May 1, 2002 (the "Indenture") among the Issuer, the Indenture Trustee and
the Trust Eligible Lender Trustee;
Whereas, pursuant to Section 7.01 of the Indenture, the Issuer desires to
enter into this Supplemental Indenture to amend the Indenture as set forth
herein; and
Whereas, the Indenture Trustee has agreed to accept the trusts herein
created upon the terms herein set forth;
Now, Therefore, in consideration of the foregoing, the parties hereto agree
that the foregoing recitals are incorporated herein by reference and as follows:
Section 1. Appendix A of the Indenture is hereby amended to add the
following defined term:
"Subordinated Issuer Termination Payment" shall mean any early
termination payment required to be made by or on behalf of the Issuer
pursuant to a Derivative Product, excluding, however, early termination
payments required to be made by the Issuer in respect of (i) a payment
default by the Issuer under the Derivative Product and (ii) the bankruptcy
or insolvency of the Issuer.
Section 2. Section 2.03 of the Indenture is hereby amended and restated in
its entirety to read as follows:
The Issuer hereby authorizes and directs the Indenture Trustee to
acknowledge and agree to any Derivative Product hereafter entered into by
the Issuer and a Counterparty under which (a) the Issuer may be required to
make, from time to time, Issuer Derivative Payments and (b) the Indenture
Trustee may receive, from time to time, Counterparty Derivative Payments
for the account of the Issuer. No Derivative Product shall be entered into
unless the Indenture Trustee shall have received a Rating Confirmation from
each Rating Agency that such Derivative
Product will not adversely affect the Rating on any of the Notes. Anything
in this Indenture to the contrary notwithstanding, any Revenues
representing Counterparty Derivative Payments of a Counterparty shall not
be available to make an Issuer Derivative Payment to another Counterparty
or to pay any other amounts owed to such Counterparty pursuant to a
Derivative Product.
No later than the fourth Business Day immediately preceding each
Derivative Payment Date the Issuer shall give written notice to the
Indenture Trustee stating (a) the amount and payer of each Counterparty
Derivative Payment, if any, due to be received by the Indenture Trustee for
the account of the Issuer on or before such Derivative Payment Date and (b)
the amount and payee of each Issuer Derivative Payment, if any, to be paid
on or before such Derivative Payment Date. If the Indenture Trustee fails
to receive such written notification from the Issuer by the end of the
third Business Day immediately preceding such Derivative Payment Date, it
shall immediately notify the Issuer of such fact in writing.
On or before each Derivative Payment Date and in accordance with the
written notification received from the Issuer, the Indenture Trustee shall
deposit all moneys received representing Counterparty Derivative Payments
into the Revenue Fund to be applied in accordance with the provisions of
Section 4.03 hereof. The Indenture Trustee shall notify the Issuer on such
Business Day, if (a) the amount received from any Counterparty is not equal
to the amount specified in the written notification of the Issuer, (b) no
amount is received from such Counterparty or (c) the amount received is not
received in immediately available funds.
On or before any Derivative Payment Date with respect to which an
Issuer Derivative Payment is due in accordance with the written
notification received from the Issuer or, with respect to a payment in
respect of an early termination date due from the Issuer pursuant to the
terms of a Derivative Product, the Indenture Trustee shall make payment to
the appropriate Counterparty from moneys in the Revenue Fund of the amount
of the Issuer Derivative Payment specified in such written notification of
the Issuer due on such date by the deposit or wire transfer of immediately
available funds to the credit of the account of such Counterparty specified
in such written notification of the Issuer, but only to the extent such
payment will not result in a deficiency in the amount due on the next
succeeding Payment Date to the holders of any class of Obligations having a
priority equal to or higher than the Derivative Product in respect of which
such Issuer Derivative Payment is due.
If any payment to a Counterparty described in the immediately
preceding paragraph would result in a deficiency in the amounts required to
make payments to the holders of the Obligations referred to in that
paragraph on such Payment Date, then the Indenture Trustee shall delay the
making of such payment to such Counterparty until the first date on which
no deficiency would result from such payment and the Indenture Trustee has
been notified in writing to make such payment.
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Section 3. Section 4.03(b) of the Indenture is hereby amended and restated
in its entirety to read as follows:
(b) On the last Business Day of each month, money remaining in the
Revenue Fund shall be used and transferred to other funds or Persons in the
following order of precedence, or as otherwise specified in a Supplemental
Indenture (any money not so transferred or paid to remain in the Revenue
Fund until subsequently applied pursuant to this Section 4.03(b)):
(i) to the Class A Account of the Interest Fund, after giving
effect to any money already on deposit in the Class A Account of the
Interest Fund for such purposes, the amount necessary to pay (a) the
interest payments due in the next succeeding month in respect of each
Series of Senior Notes for which a Payment Date will occur in that
month; provided, however, that if the interest rate on such Series of
Senior Notes is unknown, the amount to be transferred shall be
calculated using the last known interest rate for such Series, (b) the
interest to accrue during the next succeeding month in respect of each
Series of Senior Notes for which a Payment Date will not occur in that
month, and (c) any Issuer Derivative Payments (excluding any
Subordinated Issuer Termination Payments) due in the next succeeding
month in respect of any Derivative Product secured on a parity with
the Senior Notes;
(ii) to the Class A Account of the Principal Fund, after giving
effect to any money already on deposit in the Class A Account of the
Principal Fund for such purpose, the amount necessary to pay the
principal of and premium, if any, on each Series of Senior Notes due
at Stated Maturity in the next succeeding month;
(iii) to the Class B Account of the Interest Fund, after giving
effect to any money already on deposit in the Class B Account of the
Interest Fund for such purposes, the amount necessary to pay (a) the
interest payments due in the next succeeding month in respect of each
Series of Subordinate Notes for which a Payment Date will occur in
that month; provided, however, that if the interest rate on such
Series of Subordinate Notes is unknown, the amount to be transferred
shall be calculated using the last known interest rate for such
Series, (b) the interest to accrue during the next succeeding month in
respect of each Series of Subordinate Notes for which a Payment Date
will not occur in that month, and (c) any Issuer Derivative Payments
(excluding any Subordinated Issuer Termination Payments) due in the
next succeeding month in respect of any Derivative Product secured on
a parity with the Subordinate Notes;
(iv) to the Class B Account of the Principal Fund, after giving
effect to any money already on deposit in the Class B Account of the
Principal Fund for such purpose, the amount necessary to pay the
principal
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of and premium, if any, on any Subordinate Notes due at Stated
Maturity in the next succeeding month;
(v) to the Reserve Fund the amount, if any, required by Section
4.06(d) hereof;
(vi) if the Parity Percentage is not at least equal to the
Required Parity Percentage, to the Class A Account of the Principal
Fund, after giving effect to any money already on deposit in the Class
A Account of the Principal Fund for such purposes, the amount
necessary to pay the principal of and premium, if any, on Senior Notes
for which an interest Payment Date will occur in the next succeeding
month, or if no Senior Notes are Outstanding, to the Class B Account
of the Principal Fund the amount necessary to pay principal of and
premium, if any, on Subordinate Notes for which an interest Payment
Date will occur in the next succeeding month; provided, however, that
during any Revolving Period, at the direction of the Issuer, amounts
remaining in the Revenue Fund after payment of all amounts required by
(i) through (v) of this Section 4.03(b) may be used for the
acquisition or origination of other Student Loans and, provided,
further, at the direction of the Issuer, such excess amounts may also
be used to acquire Add-on Consolidation Loans originated within 180
days of the origination of the related Consolidation Loan;
(vii) to the Class B Account of the Principal Fund, after giving
effect to any money already on deposit in the Class B Account of the
Principal Fund for such purpose, from amounts representing Recoveries
of Principal, the amount necessary to pay principal of and premium, if
any, on Subordinate Notes in respect of which an interest Payment Date
will occur in the next succeeding month to the extent that after such
payment the Senior Parity Percentage shall not be less than the
Required Senior Parity Percentage; otherwise to the Class A Account of
the Principal Fund to pay principal and premium, if any, on Senior
Notes in respect of which an interest Payment Date will occur in the
next succeeding month;
(viii) to the Class A Account of the Interest Fund, after giving
effect to any money already on deposit in the Class A Account of the
Interest Fund for such purpose, the amount necessary to pay interest
accrued on the interest carryover amounts of the Senior Notes and the
interest carryover amounts of the Senior Notes, and to the Class B
Account of the Interest Fund, after giving effect to any money already
on deposit in the Class B Account of the Interest Fund for such
purpose, the amount necessary to pay interest accrued on the interest
carryover amounts of the Subordinate Notes and the interest carryover
amounts of the Subordinate Notes, in that order of priority; provided,
however, on any Payment Date, any such amount shall be allocated first
to any Notes being redeemed on such Payment Date;
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(ix) to the Class A Account of the Interest Fund, after giving
effect to any money already on deposit in the Class A Account of the
Interest Fund for such purposes, the amount necessary to pay any
Subordinated Issuer Termination Payments due in the next succeeding
month in respect of any Derivative Product secured on a parity with
the Senior Notes;
(x) to the Class B Account of the Interest Fund, after giving
effect to any money already on deposit in the Class B Account of the
Interest Fund for such purposes, the amount necessary to pay any
Subordinated Issuer Termination Payments due in the next succeeding
month in respect of any Derivative Product secured on a parity with
the Subordinate Notes; and
(xi) to the Co-Owner Trustee for deposit into the Certificate
Distribution Account (as defined in the Trust Agreement) if after
giving effect to the transfer to the Co-Owner Trustee the Parity
Percentage is at least equal to the Required Parity Percentage and the
Senior Parity Percentage is at least equal to the Required Senior
Parity Percentage; if these parity requirements are not met, then any
remainder shall be retained in the Revenue Fund; provided, however,
that during any period commencing after June 1, 2022, moneys will be
transferred to the Co-Owner Trustee pursuant to this subsection (xi)
only upon receipt of a Rating Confirmation with respect to transfers
during that period, otherwise moneys remaining in the Revenue Fund
after payment of all amounts required by (i) through (x) of this
Section 4.03(b) shall be transferred to the Principal Fund.
All payments of principal on the Notes shall be made by redemption of
the Notes unless otherwise directed in a Supplemental Indenture.
Section 4. Sections 4.04(a) and (b) of the Indenture are hereby amended and
restated in their entirety to read as follows:
(a) On the last Business Day of each month, the Indenture Trustee
shall transfer to the Class A Account of the Interest Fund from the Revenue
Fund amounts necessary to make the transfers required by Section 4.03(b)(i)
hereof. During the next succeeding month, the Indenture Trustee shall use
moneys transferred to the Class A Account of the Interest Fund pursuant to
Section 4.03(b)(i) hereof for the payment, on a parity basis, of interest
due on Senior Notes for which an interest Payment Date will occur during
that month and any Issuer Derivative Payments (excluding Subordinated
Issuer Termination Payments) due during that month on any Derivative
Product secured on a parity with such Senior Notes. Also during that month,
the Indenture Trustee shall use moneys transferred to the Class A Account
of the Interest Fund (i) pursuant to Section 4.03(b)(viii) to pay interest
accrued on the interest carryover amounts of Senior Notes for which an
interest Payment Date will occur during that month and
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the interest carryover amounts of such Senior Notes and (ii) pursuant to
Section 4.03(b)(ix) to pay Subordinated Issuer Termination Payments due
during that month in respect of Derivative Products secured on a parity
with the Senior Notes.
(b) On the last Business Day of each month, the Indenture Trustee
shall transfer to the Class B Account of the Interest Fund from the Revenue
Fund amounts necessary to make the transfers required by Section
4.03(b)(iii) hereof. During the next succeeding month, the Indenture
Trustee shall use moneys transferred to the Class B Account of the Interest
Fund pursuant to Section 4.03(b)(iii) hereof for the payment, on a parity
basis, of interest due on Subordinate Notes for which an interest Payment
Date will occur during that month and any Issuer Derivative Payments
(excluding Subordinated Issuer Termination Payments) due during that month
on any Derivative Product secured on a parity with such Subordinate Notes.
Also during that month, the Indenture Trustee shall use moneys transferred
to the Class B Account of the Interest Fund (i) pursuant to Section
4.03(b)(viii) to pay interest accrued on the interest carryover amounts of
Subordinate Notes for which an interest Payment Date will occur during that
month and the interest carryover amounts of such Subordinate Notes and (ii)
pursuant to Section 4.03(b)(x) to pay Subordinated Issuer Termination
Payments due during that month in respect of Derivative Products secured on
a parity with the Subordinate Notes.
Section 5. Section 4.08 of the Indenture is hereby amended and restated in
its entirety to read as follows:
Transfers from the Revenue Fund to the Co-Owner Trustee may be made in
accordance with Section 4.03(b)(xi) hereof; provided, however, that no
transfer of assets to the Co-Owner Trustee shall be made if there is not on
deposit in the Reserve Fund an amount equal to at least the Reserve Fund
Requirement; and further provided, that no transfer shall be made to the
Co-Owner Trustee unless immediately after taking into account any such
transfer, the Parity Percentage is at least equal to the Required Parity
Percentage and the Senior Parity Percentage is at least equal to the
Required Senior Parity Percentage.
The amounts so transferred to the Co-Owner Trustee shall be
distributed as provided in the Trust Agreement.
Section 6. The provisions of the Indenture are hereby ratified, approved
and confirmed, except as otherwise expressly modified by this Supplemental
Indenture.
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In Witness Whereof, the Issuer has caused this Supplemental Indenture to be
executed in its name and on its behalf by the Co-Owner Trustee; the Indenture
Trustee, to evidence its acceptance of the trusts hereby created, has caused
this Supplemental Indenture to be executed in its name and behalf; and the Trust
Eligible Lender Trustee, to evidence its acceptance of the trusts hereby
created, has caused this Supplemental Indenture to be executed in its name and
behalf, all in multiple counterparts, each of which shall be deemed an original,
and the Issuer, the Indenture Trustee and the Trust Eligible Lender Trustee have
caused this Supplemental Indenture to be dated as of the date herein above first
shown, although actually executed on the dates shown in the acknowledgments
hereafter appearing.
Education Funding Capital Trust-I,
By Fifth Third Bank, not in its
individual capacity, but solely as
Co-Owner Trustee on behalf of the
Trust
By:
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Name:
Title:
Fifth Third Bank, not in its
individual capacity but solely as
Indenture Trustee
By:
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Name:
Title:
Fifth Third Bank, not in its
individual capacity but solely as
Trust Eligible Lender Trustee
By:
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Name:
Title:
